Which of the Following Is a Reason Why a Greater

question 87

Multiple Choice

Which of the following is a reason why a greater capital stock can reduce investment?

• A) A greater capital stock is likely to lead to less investment because further increases in the demand for investment tend to raise the cost of capital.
• B) Since businesses undertake investment to adjust their stock of capital to its desired level, the amount of investment needed to reach the desired level will be lower when the current capital stock is higher.
• C) A greater capital stock is likely to lead to less investment since there will be less old capital to replace.
• D) The rate of new technological innovations tends to deter investment in new capital because capital becomes obsolete at a faster rate.

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Definitions:

Transpiration

The process by which moisture is carried through plants from roots to small pores on the underside of leaves, where it changes to vapor and is released into the atmosphere.

Grow Crops

The practice of cultivating plants, especially on a large scale for food or other uses.

Soil Type

Classification of soil based on physical, chemical, and biological properties affecting its use and management.

Farmer

An individual who engages in agriculture, raising living organisms for food or raw materials.