McqMate
| Q. |
Investment is equal to : |
| A. | gross total of all types of physical capital assets |
| B. | gross total of all capital assets minus wear and tear |
| C. | stock of plants, machines and equipments |
| D. | None of the above |
| Answer» B. gross total of all capital assets minus wear and tear | |
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Explanation: Capital formation is frequently thought of as a measure of total "investment", in the sense of that portion of capital actually used for investment purposes and not held as savings or consumed. But in fact, in national accounts, the concept of gross capital formation refers only to the accounting value of the "additions of non- financial produced assets to the capital stock less the disposals of these assets". "Investment" is a broader concept that includes investment in all kinds of capital assets, whether physical property or financial assets. |
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