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According to one popular kind of macro-economic definition in textbooks, capital formation refers to "the transfer of savings from households and governments to the business sector, resulting in increased output and economic expansion" (see Circular flow of income). The idea here is that individuals and governments save money, and then invest ...
where Y is the net national income, w is the money wage rate, N is the number of workers employed, K is the amount of capital utilized, p is the average price of output as well as of capital and π is the gross profit rate.The above equation indicates that the profit rate is a functional of labour productivity (p)and real wage rate(w/p)and ...
Also called resource cost advantage. The ability of a party (whether an individual, firm, or country) to produce a greater quantity of a good, product, or service than competitors using the same amount of resources. absorption The total demand for all final marketed goods and services by all economic agents resident in an economy, regardless of the origin of the goods and services themselves ...
The concept dates back to the National Bureau of Economic Research (NBER) studies of Simon Kuznets of capital formation in the 1930s, and standard measures for it were adopted in the 1950s. GFCF is called "gross" fixed capital formation because the measure does not make any adjustments to deduct the consumption of fixed capital ( depreciation ...
Capital budgeting, in relation to engineering economics, is the proper usage and utilization of capital to achieve project objectives. It can be fully defined by the statement; "... as the series of decisions by individuals and firms concerning how much and where resources will be obtained and expended to meet future objectives."
Fixed investment in economics is the purchase of newly produced physical asset, or, fixed capital. It is measured as a flow variable – that is, as an amount per unit of time. Thus, fixed investment is the sum of physical assets [ 1 ] such as machinery, land, buildings, installations, vehicles, or technology.
Cambridge capital controversy; Portal:Capitalism/Selected quote; Portal:Capitalism/Selected quote/56; Capital (Marxism) Capital accumulation; Capital flight; Capital formation; Capital good; Capital intensity; Capital outflow; Capital services; Capital strike; Circulating capital; Constant and variable capital; Consumption of fixed capital ...
Attempts have been made to estimate the value of the stock of fixed capital for the whole economy using direct enterprise surveys of "book value", administrative business records, tax assessments, and data on gross fixed capital formation, price inflation and depreciation schedules. A pioneer in this area was the economist Simon Kuznets. [3]