To Determine the Change in the Capital Stock, the Level

question 12

Multiple Choice

To determine the change in the capital stock, the level of new investment must be adjusted for depreciation because some new investment

• A) is not used immediately.
• B) merely replaces existing, but worn out, capital.
• C) replaces existing workers.
• D) is more efficient than existing capital.

---

Definitions:

R&D

Stands for Research and Development, which refers to investigative activities a business conducts to improve existing products and procedures or to lead to the development of new products and procedures.

Economic Profit

The difference between total revenue and total costs, including both explicit and implicit costs, representing the actual profitability of a company beyond just its accounting profits.

Inverted-U Theory

A hypothesis suggesting that a relationship between two variables follows an upside-down U shape, often applied to the correlation between productivity and stress levels.

R&D Expenditures

Financial investments made by firms, governments, or institutions in research and development activities aimed at innovation, creating new products, or improving existing ones.