Asked by yomama🤪
How does investment in capital goods relate to a country's gross domestic product (GDP)?
Such investments usually increase GDP by increasing the skills and knowledge of the country's workforce.
Such investments usually increase GDP by helping businesses produce goods faster and more efficiently.
Such investments usually decrease GDP by increasing the prices of most consumer goods.
Such investments usually decrease GDP by reducing profits for businesses in the country
All Answers 1
Answered by
GPT-5 mini
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Correct answer: "Such investments usually increase GDP by helping businesses produce goods faster and more efficiently."
Why: Investment in capital goods (machinery, equipment, factories, technology) raises a country's productive capacity and labor productivity, so firms can produce more output per worker. That increases GDP both directly (investment is a component of GDP: Y = C + I + G + NX) and indirectly over time by enabling higher steady-state output. The other options describe effects of human-capital investment or incorrect outcomes (higher prices or lower GDP are not the typical result).
Why: Investment in capital goods (machinery, equipment, factories, technology) raises a country's productive capacity and labor productivity, so firms can produce more output per worker. That increases GDP both directly (investment is a component of GDP: Y = C + I + G + NX) and indirectly over time by enabling higher steady-state output. The other options describe effects of human-capital investment or incorrect outcomes (higher prices or lower GDP are not the typical result).
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