The change in capital stock in a period is equal to
A) the ratio of the amount of the capital at the beginning of the period to the amount of depreciation.
B) the amount of the capital stock at the beginning of the period plus gross investment minus depreciation.
C) the amount of the capital at the beginning of the period plus gross investment.
D) the amount of the capital at the beginning of the period minus net investment.

Question

Quizplus · Accepted Answer

The change in capital stock in a period is equal to the amount of the capital stock at the beginning of the period plus gross investment minus depreciation. This is because gross investment increases the capital stock, while depreciation decreases it. Therefore, the net change in capital stock is equal to the difference between the two. Option A is incorrect as it only takes into account depreciation but not gross investment. Option C is incorrect as it does not subtract depreciation. Option D is incorrect as it subtracts net investment instead of adding it.

The Change in Capital Stock in a Period Is Equal