Question

How does investment in capital goods affect a nation's Gross Domestic Product (GDP)? A It causes the nation's GDP to rise. B It causes the nation's GDP to fall. C It causes the nation's GDP to rise and fall irregularly from year to year. D It causes the nation's GDP to cease to rise or fall at any significant rate.

Answer 1

Answer: A. It causes the nation's GDP to rise.

Explanation:

Capital goods are regarded to as the assets that companies use to produce their goods and provide services to the people. Example of capital goods include machines, buildings, and vehicles, machinery.

It should be noted that investment in capital goods being about economic growth. When companies invest in capital goods, it had an effect on production as there are more goods available to the people which brings about increase in the GDP of that economy. It should be noted that the GDP is the value of the goods that such economy produces.