Which of the following statements about capital are correct? a) In economic jargon capital is the net worth of a business enterprise. b) Capital is defined as anything that is produced that then produces other things c) An increase in capital will grow the economy because capital is a resource in the production process and an increase in resources increases the production possibilities or potential production of the economy. d) Capital represents the tools that labor uses and thus an increase in capital tends to increase the productivity of labor (and possibly other resources) and that magnifies economic growth. e) Most technological advances involve improvements to the tools of production, which is capital, so embodiment of new technology in capital is yet another way capital fosters economic growth.
Which of the following statements about capital are correct?
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a) In economic jargon capital is the net worth of a business enterprise. |
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b) Capital is defined as anything that is produced that then produces other things |
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c) An increase in capital will grow the economy because capital is a resource in the production process and an increase in resources increases the production possibilities or potential production of the economy. |
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d) Capital represents the tools that labor uses and thus an increase in capital tends to increase the productivity of labor (and possibly other resources) and that magnifies |
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e) Most technological advances involve improvements to the tools of production, which is capital, so embodiment of new technology in capital is yet another way capital fosters economic growth. |
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f) increasing capital in the economy has to lead to greater income inequality, since most capital is owned by the rich. |
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g) As capital increases labor productivity, it leads to increased wages (assuming competitive markets), thus it need not result in greater income inequality. |
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h) Capital includes improvements to the other resources, such as clearing the land for agriculture, or training and education that improves the labor services of workers creates what is called human capital. |
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