Detailed explanation and options for the selected question.
Which of the following best describes “capital formation”?
A.
Increase in consumer spending
B.
Increase in production capacity of the economy
C.
Reduction in fiscal deficit
D.
Increase in exports
Explanation:
Capital formation refers to the increase in the production capacity of the economy through investment in physical assets. It is unrelated to consumer spending, fiscal deficits, or exports.