That part of the final output of an economy which consists of capital goods is called:
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → Gross investment
The part of final output made up of capital goods is the gross investment of an economy. It includes the capital goods that replace worn-out ones.
Option (1) Inventories — Incorrect. Inventories are unsold goods and raw materials a firm carries from one year to the next.
Option (2) Net investment — Incorrect. Net investment is gross investment minus depreciation, so it is only a part of these capital goods.
Option (3) Depreciation — Incorrect. Depreciation is the yearly allowance for wear and tear of capital.
Option (4) Gross investment — Correct. All capital goods in final output, new and replacement, make up gross investment.
NCERT (2026-27): “2.1 Some Basic Concepts of Macroeconomics … To come back to our discussion on the measure of final output, that part of our final output that comprises of capital goods constitutes gross investment of an economy. These may be machines, tools and implements; buildings, office spaces, storehouses or infrastructure like roads, bridges, airports or jetties. But all the capital goods produced in a year do not constitute an addition to the capital stock already existing. …” |