Home » mcq » Indian Economy » Gross domestic capital formation is defined as A. flow of expenditure devoted to increased or maintaining of the capital stock B. expenditure incurred on physical assets only C. production exceeding demand D. net addition to stock after depreciation
Gross domestic capital formation is defined as A. flow of expenditure devoted to increased or maintaining of the capital stock B. expenditure incurred on physical assets only C. production exceeding demand D. net addition to stock after depreciation
capital formation (GDCF) is the total value of all new fixed assets created within a country’s borders in a given year. It includes expenditure on new construction, machinery and equipment, and intellectual property products. GDCF is a key measure of economic activity, as it reflects the amount of investment that businesses and households are making in the future.
Option B is incorrect because it only includes expenditure on physical assets. GDCF also includes expenditure on intellectual property products, such as patents and trademarks.
Option C is incorrect because it is not a measure of investment. Production exceeding demand would lead to a build-up of inventories, which is not considered to be investment.
Option D is incorrect because it is not a measure of investment. Net addition to stock after depreciation is a measure of the change in the capital stock, not the amount of investment.