Cause(s) the capital stock to rise, while cause(s) the capital stock to fall.

Question

Quizplus · Accepted Answer

Investment increases the capital stock by creating new physical and human capital, while depreciation decreases the capital stock by reducing the value of existing capital. None of the other options have a direct effect on the capital stock. Inflation and deflation affect the purchasing power of money, but do not directly impact the total quantity of capital goods. Interest rates and the discount rate can influence investment decisions, but do not directly alter the quantity of capital. International trade and depressions can impact economic activity, but again do not directly impact the capital stock.

Cause(s) the Capital Stock to Rise, While Cause(s) the Capital