When investment is equal to depreciation, the capital stock
A) increases.
B) decreases.
C) remains constant.
D) becomes unimportant.

Question

Quizplus · Accepted Answer

When investment is equal to depreciation, the capital stock remains constant. Investment is the amount of resources being added to the capital stock, while depreciation is the amount of resources leaving the capital stock due to wear and tear or obsolescence. If investment is equal to depreciation, then the net change in the capital stock is zero, meaning it remains at the same level.

When Investment Is Equal to Depreciation, the Capital Stock