ECONOMICS
BUSINESS CYCLES
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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spending on stocks, bonds, and financial assets
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spending by the central bank on government securities
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changes in private and business savings
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business spending on capital goods
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policies that lead to long run economic growth
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Detailed explanation-1: -Gross fixed capital formation (GFCF), also called “investment", is defined as the acquisition of produced assets (including purchases of second-hand assets), including the production of such assets by producers for their own use, minus disposals.
Detailed explanation-2: -The calculation of a country’s GDP encompasses all private and public consumption, government outlays, investments, additions to private inventories, paid-in construction costs, and the foreign balance of trade. (Exports are added to the value and imports are subtracted).
Detailed explanation-3: -Thus investment is everything that remains of total expenditure after consumption, government spending, and net exports are subtracted (i.e. I = GDP − C − G − NX ).
Detailed explanation-4: -With capital expenditure taken together with the provision made for creation of capital assets through Grants-in-Aid to States, the ‘Effective Capital Expenditure’ of the Central Government is estimated at Rs. 10.68 lakh crore in 2022-23, which will be about 4.1% of GDP, informed the minister.