Indian-Economy
General Knowledge

 Back to Questions
Q.

Gross fixed domestic capital formation is defined as:

 A.

flow of expenditure devoted to increased or maintaining of the capital stock

 B.

expenditure incurred on physical assets only

 C.

measures the value of acquisitions of new or existing fixed assets by the business sector, governments and "pure" households

 D.

net addition to stock after depreciation

 Hide Ans

Solution:
Option(C) is correct

Gross fixed capital formation (GFCF) is a macroeconomic concept used in official national accounts such as the United Nations System of National Accounts (UNSNA), National Income and Product Accounts (NIPA) and the European System of Accounts (ESA).

Statistically it measures the value of acquisitions of new or existing fixed assets by the business sector, governments and "pure" households (excluding their unincorporated enterprises) less disposals of fixed assets.

GFCF is a component of the expenditure on gross domestic product (GDP), and thus shows something about how much of the new value added in the economy is invested rather than consumed.


(0) Comment(s)