Which of the Following Statements Is Correct

question 71

Multiple Choice

Which of the following statements is correct?

• A) It is desirable to invest in more capital goods for future economic growth only if the marginal benefit of the investment exceeds the marginal cost.
• B) The marginal benefit of capital goods will increase as more capital goods are produced.
• C) In order to produce capital goods, more consumption goods must be produced in the present.
• D) As additional units of capital goods are produced, the marginal productivity of capital will increase, because labor will have more capital with which to work.

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Definitions:

Equal Annual

This term refers to an approach or method where amounts or payments are distributed equally across multiple years.

Net Present Value

A method used to evaluate the profitability of an investment by calculating the difference between the present value of cash inflows and outflows over a period of time.

Rate of Return

The increase or decrease in value of an investment for a set duration, shown as a percentage of the original investment amount.

Present Value Factors

The numerical factors used in calculating the present value of future cash flows, based on a specific discount rate and time period.