ECO200Y1 Lecture Notes - Lecture 12: Gross Fixed Capital Formation, Fixed Capital, Capital Formation

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ECO200Y1 Lecture Notes - Lecture 11: Simple Linear Regression, Heteroscedasticity, Autocorrelation

ECO200Y1 Lecture Notes - Lecture 12: Gross Fixed Capital Formation, Fixed Capital, Capital Formation

ECO200Y1 Lecture Notes - Lecture 15: Price Discrimination, Perfect Competition, Market Power

Document Summary

Investment, in macroeconomics, is the expenditure on goods and services that will be used in the future in the production of other goods and services. Also called training gross capital, investment increases the productive resources of an economy and, therefore, its production possibilities. Investment is at the root of economic growth and development. Investing means giving up consumption in the present in exchange for an increase in capacity production, which will enable greater consumption in the future. Being fundamental for the social well-being of present and future generations, investment is decided, in a market economy, by companies, based on expected profitability. Yours magnitude depends on the interest rate associated with the financing and the expectations of regarding the future economic situation. Approximately 95% of the investment consists of the constitution of physical capital (gross fixed capital), which is the set of physical resources that are used for (buildings, machinery, equipment).

Related Questions

An improvement in technology causes the production possibilities frontier (PPF) to

	shift to the right.
	pivot upward.
	shift to the left.
	pivot downward.

(7)

Which of the following is not shown by the circular flow model?

	The flow of resources in one direction and money in the other
	The equality of aggregate spending and aggregate income
	The interaction of households, firms, and the government
	The total amount of goods and services the economy can produce

(8)

Gross domestic product (GDP) is defined as

	the market value of all final goods and services produced in an economy in a given period of time.
	the market value of all consumption goods and services produced in an economy in a given period of time.
	the market value of all investment goods and services produced in an economy in a given period of time.
	the real value of all investment goods and services produced in an economy in a given period of time.

(9)

Real GDP

	includes all domestic and foreign transactions.
	includes the dollar value of domestic transactions only.
	tries to isolate the effect of changing output, holding prices constant.
	measures GDP in terms of prices of goods and services produced.

(10)

When economists talk about economic growth, they are usually referring to

	the percentage change in nominal GDP.
	the percentage change in real GDP.
	the percentage change in nominal investment.
	the percentage change in real investment.

chocolateant769

An increase in capital goods and a decrease in consumer goods will:
A) eventually lead to a shift to the right of the production possibilities curve.
B) increase a nation's capacity to produce.
C) lead to more rapid economic growth.
D) do all of the above.

79. Increases in resources or improvements in technology will tend to cause a society's production possibilities curve to:
A) shift inward to the left.
B) shift outward to the right.
C) remain unchanged.
D) become vertical.

80. Capital, labor, and natural resources combine to produce goods and services. Which of the following will not lead to an increase in the ability of an economy to produce goods and services?
A) increased training for workers
B) establishing a more productive technology
C) new government restrictions on which technologies may be used to produce goods and services
D) discovery of new oil reserves

lemonelk133

Question 1 Gross domestic product (GDP) measures the economy's production of

A) final goods and services.

B) intermediate goods.

C) consumer goods and services.

D) capital goods.

Question 2 Because GDP is measured in dollars per year, GDP is called a

A) stock.

B) flow.

C) cycle.

D) chain.

Question 3 Which of the following would not be included in the gross private domestic investment (I) category of GDP?

A) A retailer's additions to its inventories.

B) A bakery's purchase of a new oven.

C) A trader's purchase on NASDAQ stocks.

D) Newly built residential construction.

Question 4 Which of the following government payments would be included in the government consumption expenditures and gross investment (G) category of GDP?

A) A firefighter's monthly paycheck.

B) A retired grandmother's Social Security check.

C) A retired colonel's veteran's benefits.

D) A laid-off auto worker's unemployment conpensation check.

Question 5 The largest component in the income approach to measuring GDP is

A) compensation of employees.

B) rents.

C) profits.

D) net interest.

Question 6 Which approach to calculating GDP attempts to measure employee compensation, rents, profits, and net interest?

A) The circular-flow approach.

B) The product-market approach.

C) The income approach.

D) The expenditure approach.

Question 7 In recent years, people have benefited from greater amounts of leisure time. This trend

A) has caused GDP to rise.

B) has caused GDP to fall.

C) made GDP fluctuate randomly.

D) is not accounted for in the GDP statistic.

Question 8 National income (NI) is calculated by adjusting GDP for

A) depreciation of capital.

B) investment and net exports.

C) Social Security insurance contributions and transfer payments.

D) corporate and personal income taxes.

Question 9 If an economy's real GDP has increased, we can conclude that the economy

A) is inflationary.

B) has increased its production.

C) suffers from recession.

D) needs a tax cut.

Question 10 In the circular flow model, investment, government spending, and exports are classified as

A) injections.

B) leakages.

C) transfers.

D) consumption expenditures.

ECO200Y1 Lecture Notes - Lecture 12: Gross Fixed Capital Formation, Fixed Capital, Capital Formation

ECO200Y1 Lecture Notes - Lecture 11: Simple Linear Regression, Heteroscedasticity, Autocorrelation

ECO200Y1 Lecture Notes - Lecture 12: Gross Fixed Capital Formation, Fixed Capital, Capital Formation

ECO200Y1 Lecture Notes - Lecture 15: Price Discrimination, Perfect Competition, Market Power

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