When Current Saving and Investment Are Just Enough to Equip

question 18

Multiple Choice

When current saving and investment are just enough to equip new entrants into the labor force with the same amount of capital that the average person already in the work force uses, then

• A)the economy is in a steady state
• B)output per head is constant
• C)capital per head is constant
• D)capital is growing at the same rate as the population
• E)all of the above

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Definitions:

Liability

A financial obligation or debt that an individual or company owes, which must eventually be settled or paid off.

Common Stockholders

Individuals or entities that own the common shares of a company, granting them rights to vote on corporate matters and receive dividends.

Gross Investment

The total amount of money spent on new capital assets, not accounting for depreciation, indicating the aggregate investment in an economy.

Net Investment

The aggregate expenditure of a business or economy on capital assets, after subtracting depreciation.