Depreciation or consumption of fixed capital depreciation measures:
a. net investment less gross investment.
b. the loss of productive ability due to capital intensive production.
c. capital that is wasted in the production process.
d. the value of existing capital stock used up in the production process.
e. the decline in the value of inventories caused by inflation.
d
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The reason the production possibilities curve is bowed outward (concave) is
A) the law of increasing additional cost. B) that technology is constantly changing. C) that the number of resources is increasing. D) that the economy has more capital goods than entrepreneurial effort.
The real-balance effect shows that
A) aggregate demand is upward sloping. B) a higher price level leads to higher interest rates. C) a lower price level will increase the purchasing power of currency and increase personal consumption. D) consumption and the price level are positively correlated.