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) DI exceeds PI.
D) gross domestic investment exceeds depreciation.

Question

Quizplus · Accepted Answer

When an economy's production capacity is expanding, the amount of gross domestic investment is exceeding the amount of depreciation, indicating that the economy is investing more in its capital stock and experiencing positive economic growth. Therefore, D is the correct choice. A, B, and C are incorrect because they do not necessarily indicate economic growth.

When an Economy's Production Capacity Is Expanding