Capital
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| show | Increased productive capacity, increased labour productivity, increased employment, increased GNP, increased government revenues, investment generates future wealth for the economy.
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| show | Rates of Interest(cost of borrowing), business people's expectations, government economic policies, the international economic climate, the marginal efficiency of capital, stability in the banking sector, the cost of capital goods, availability of a skill
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| show | Future expectations for the economy,
security of savings, price levels(real rate of interest), quality of financial products, deferred spending, future levels of state benefits.
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| show | Transactionary motive, precautionary, speculative motive.
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| Explain the transactionary motive? | show 🗑
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| show | People desire to hold money for emergencies/rainy day e.g. illness, house repairs.
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| Explain the speculative motive? | show 🗑
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| State which motive is not affected by a fall in the rate of interest? | show 🗑
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| State which motive is slightly negatively affected by a fall in the rate of interest? | show 🗑
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| State which motive is greatly negatively affected by a fall in the rate of interest? | show 🗑
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| State the main influences on the transactionary motive? | show 🗑
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| State the main influences on the precautionary motive? | show 🗑
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| show | Interest rates, market value of bonds.
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| Illustrate your understanding of the term capital? | show 🗑
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| show | This is the extra profit earned as a result of employing one extra unit of capital.
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| show | The stock of fixed assets. e.g. plant , equipment, tools
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| Illustrate your understanding of the term social capital? | show 🗑
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| show | Owners of capital who receive interest. The decision to save is made by individuals. Income not spent. e.g. income€100 less spending€80 means savings =€20
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| show | Users of capital who pay interest. The decision to invest is made by producers/firms. Production of capital goods/ additions to capital stock e.g. purchase of new machinery by a firm.
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| show | The amount of capital per worker remains unchanged. An increase in the capital stock, which leave the capital/labour ratio unchanged. e.g. period 1: 4 machines& 4 men. Period 2: 8 machines & 8 men
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| Illustrate your understanding of the term capital deepening? | show 🗑
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| show | When the rate of interest is low, the opportunity cost(of the interest foregone)is low, so people prefer to hold money.When the interest rate is high, the opportunity cost is high-as it is now more costly to hold money-so less money is held.
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Created by:
deborahh
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