Asked by Karen Macauley on Apr 27, 2024
Verified
An economy is enlarging its stock of capital goods
A) when net investment exceeds gross investment.
B) when gross investment exceeds depreciation.
C) only when added investment exceeds depreciation.
D) when depreciation exceeds gross investment.
Stock Of Capital Goods
The total quantity of physical assets such as machinery, buildings, and equipment that are used to produce goods and services.
Gross Investment
The total amount spent on purchases of new capital assets plus replacement of depreciated assets.
Depreciation
The gradual decrease in the economic value of the capital stock of a firm, nation, or other entity, either through physical wear and tear or through obsolescence.
- Familiarize yourself with the ideas of gross and net investment and their significance in the economic context.
Verified Answer
AS
Anthony SandovalApr 28, 2024
Final Answer :
B
Explanation :
Enlargement of the stock of capital goods indicates an increase in the net capital stock, which can be calculated as Gross Investment minus Depreciation. Therefore, when Gross Investment exceeds Depreciation, the stock of capital goods enlarges.
Learning Objectives
- Familiarize yourself with the ideas of gross and net investment and their significance in the economic context.