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3 years ago

Discuss the importance of gross capital formation

2 answers:

3 0

Capital formation improves the conditions and methods for the production of a country. Hence, there is much increase in national income and per capital income. This leads to increase in quantity of production which leads to again rise in national income. The World Bank tracks gross capital formation, which it defines as outlays on additions to fixed assets, plus the net change in inventories. Fixed assets include plant, machinery, equipment, and buildings, all used to create goods and services. Inventory includes raw materials and goods available for sale.Oct

Mariana [72]3 years ago

3 0

Answer:

Private investment measured by gross capital formation is positive and strongly significant. In fact a 1% variation of physical capital leads to an increase of 0.833% of economic growth. The decomposition of this capital shows a domination of fixed and movable assets.

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Assume that the United States and India enjoy constant opportunity costs in the production possibilities shown in the table.

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The nation that has the absolute advantage in peanuts is India.

<h3>How to solve for the absolute advantage of these countries</h3>

a. The country that has the absolute advantage in the pounds of peanuts is India. They are able to produce 10 million worth of the product.

b. This is in the attachment

c. From the calculated opportunity costs, India has been shown to have the comparative advantage in peanuts so they have to specialize here.

The US on the other hand has to specialize in pecans because they have the comparative advantage in it.

d) The PPC for each country is a diagram

e. ) The terms of trade would be a pound of peanut for a pound of pec an for the countries.

Based on this the US would produce 10 units for pecans. They would use 5 units and exchange the remaining 5 units of pecans for 5 units of peanuts from India.

India is also going to do likewise.

Read more on production possibility curve here:

brainly.com/question/2601596

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3 years ago

Discuss the importance of gross capital formation ​

Discuss the importance of gross capital formation