The Total Amount Spent on New Capital in a Time

question 183

Multiple Choice

The total amount spent on new capital in a time period is equal to

• A) wealth.
• B) gross investment.
• C) depreciation.
• D) net investment.

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Definitions:

Substitution Effect

The change in consumption patterns due to a change in the relative prices of goods, leading consumers to substitute one good for another that has become relatively cheaper.

Income Effect

Modifications in the earnings of individuals or the broader economy and their effects on the quantity of goods or services demanded.

Consumer Price Index

An index that measures the change over time in the price of a basket of consumer goods and services, often used as a measure of inflation.

Real Wages

Wages adjusted for inflation, representing the purchasing power of income earned through work.