The rate of capital formation is the ratio between the gross capital formation and gross domestic product at current prices.

True

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False

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Solution

The correct option is A True
The rate of capital formation is the ratio between (the increase in fixed capital and inventories) and (the total value of good produced and services provided in a country during one year).

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Similar questions

Q. Mention the situations in which following equations will hold true:
(i) Value of Output is equal to Value Added.
(ii) National income at Current Price

=

National income at Constant Price
(iii) Gross domestic capital formation

=

Gross domestic fixed capital formation
(iv) Operating Surplus

=

Rent

+

Royalty

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Profit

Q. Gross domestic capital formation includes:

Q. Are the following statements true or false? Give reasons.
Gross domestic capital formation is always greater than gross fixed capital formation.

Q. If a country desires to grow its GDP at 10% and its ICOR is 2.6, then what should be its Capital formation?

Calculate (a) Gross domestic product at market price and (b) Factor income from abroad from the following data:

$\begin{matrix} (Rs in '000 crores) (i) Profits & 500 (ii) Exports & 40 (iii) Compensation of employees & 1, 500 (iv) Gross national product at factor price & 2, 800 (v) Net current transfer from rest of the world & 90 (vi) Rent & 300 (vii) Interest & 400 (viii) Factor income to abroad & 120 (ix) Net indirect taxes & 250 (x) Net domestic capital formation & 650 (xi) Gross fixed capital formation & 700 (xii) Change in stock & 50 \end{matrix}$

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The rate of capital formation is the ratio between the gross capital formation and gross domestic product at current prices.

The correct option is A TrueThe rate of capital formation is the ratio between (the increase in fixed capital and inventories) and (the total value of good produced and services provided in a country during one year).

The correct option is A True
The rate of capital formation is the ratio between (the increase in fixed capital and inventories) and (the total value of good produced and services provided in a country during one year).