1. When the depreciation (consumption of fixed capital) is higher than the gross domestic investment, it indicates that: A. real GDP is increasing but nominal GDP is decreasing.
What can we conclude if depreciation consumption of fixed capital exceeds gross domestic investment?
If depreciation (consumption of fixed capital) exceeds gross domestic investment, we can conclude that: net investment is negative. Consumption of fixed capital (depreciation) can be determined by: subtracting NDP from GDP.
What can be concluded if depreciation is greater than gross investment?
If depreciation exceeds gross investment: the economy’s stock of capital is shrinking. … If depreciation (consumption of fixed capital) exceeds domestic investment, we can conclude that: net investment is negative.
When gross investment is greater than depreciation then the nation’s capital stock increased?
Because Gross Investment exceeds depreciation, is the Net Investment positive or negative? Positive. The nation’s stock of capital rises by the amount of Net Investment. You just studied 33 terms!
What happens when gross investment exceeds depreciation?
If net investment is negative this means that depreciation is greater than gross investment, or more capital wears out than is produced so we would have a “declining economy“. If gross investment (all new capital that is produced) EQUALS depreciation (capital that wears out) then net investment will equal zero.
Which would be considered an investment according to economists?
By investment, economists mean the production of goods that will be used to produce other goods. This definition differs from the popular usage, wherein decisions to purchase stocks (see stock market) or bonds are thought of as investment.
What best measures a nation’s standard of living?
The generally accepted measure of the standard of living is GDP per capita. 2 This is a nation’s gross domestic product divided by its population. The GDP is the total output of goods and services produced in a year by everyone within the country’s borders.
Do transfer payments reflect inflation?
Transfer payments are: A) excluded when calculating GDP because they only reflect inflation. … excluded when calculating GDP because they do not reflect current production. C) included when calculating GDP because they are a category of investment spending.
What is the smallest dollar amount in the United States?
Disposable income represents the smallest dollar amount in the United States. Disposable income represents the smallest dollar amount in the United States.
Is nominal or real GDP higher?
Since inflation is generally a positive number, a country’s nominal GDP is generally higher than its real GDP. … That means that real GDP growth reflects a country’s increased output and is not influenced by inflation increasing price level.
What does a positive value of x m indicate?
GDP is the current value of all final goods and services produced in a nation in a year. … What does a positive value of (X – M) indicate? net national product (NNP) Which measure of national productivity would include the loss in value to an automobile after an additional year of use?
When bread is baked but put away for later sale this is called?
When bread is baked but put away for later sale, this is called: investment in inventory.
Is capital depreciation included in GDP?
Two non-income adjustments are made to the sum of these categories to arrive at GDP: Indirect taxes minus subsidies are added to get from factor cost to market prices. Depreciation (or Capital Consumption Allowance) is added to get from net domestic product to gross domestic product.