We can tell how much physical capital has been added to the economy by:

Question

Quizplus · Accepted Answer

Physical capital is the stock of tools, equipment, and structures that are used to produce goods and services. Adding up the value of all capital that has ever been built (option B) is not an accurate way to measure how much physical capital has been added to the economy in a given period of time. Counting the number of persons of working age (option C) or the number of persons of working age who are employed (option D) does not directly measure the amount of physical capital in the economy. The best choice is thus option A, which takes into account both new investment and depreciation of capital to determine the net addition of physical capital to the economy.

We Can Tell How Much Physical Capital Has Been Added