When an economy's production capacity is expanding:
A)nominal GDP, but not necessarily real GDP, is rising.
B)net exports is always a positive amount.
C)disposable income exceeds personal income.
D)gross investment exceeds depreciation.

Question

Quizplus · Accepted Answer

When an economy's production capacity is expanding, it means that the economy is able to produce more goods and services. Gross Investment represents the amount of investment in an economy and Depreciation refers to the decrease in the value of capital goods over time. When Gross Investment exceeds Depreciation, it implies that the economy is increasing its capital stock and the production capacity is expanding. Therefore, D is the correct choice.

When an Economy's Production Capacity Is Expanding