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York University
Administrative Studies
ADMS 1010

University of LethbridgeDepartment of EconomicsECON 1012Introduction to MacroeconomicsInstructorMichael G LanyiestmentCH 23Finance Saving Inv1Capital isAthe tools instruments machines buildings and other items that have been produced in the past and that areused today to produce goods and servicesBfinancial wealthCnet investmentDgross investmentEthe sum of investment and government expenditure on goodsTopicFinancial Institutions and Financial Markets2Gross investmentAis the change in the value of capitalBincludes only replacement investmentCis the total amount spent on new capitalDequals saving minus wealthEequals wealth minus savingTopicFinancial Institutions and Financial Markets3The total amount spent on new capital isAdepreciationBnet investmentCsavingDgross investmentEwealthTopicFinancial Institutions and Financial Markets4In January 2008 Tims Gyms Inc owned machines valued at 1 million During the year the market value of themachines fell by 30 percent During 2008 Tim spent 200000 on new machines During 2008 Tims gross investmentwasA1 millionB300000C100000D900000E200000TopicFinancial Institutions and Financial Markets5Net investment equalsAgross investment minus depreciationBthe total quantity of plant equipment and buildingsCcapital minus depreciationDwealth minus savingEgross investmentdepreciationTopicFinancial Institutions and Financial Markets16The increase in the value of capital isAnet investmentBwealthCdepreciationDprivate sector spendingEgross investmentTopicFinancial Institutions and Financial Markets7Capital stock increases whenAgross investment exceeds net investmentBnet investment exceeds gross investmentCgross investment is negativeDnet investment is zeroEnet investment is positiveTopicFinancial Institutions and Financial Markets8If the economys capital increases over timeAgross investment equals depreciationBdepreciation is less than zeroCnet investment is positiveDdepreciation exceeds gross investmentEgross investment is zeroTopicFinancial Institutions and Financial Markets9If the economys capital decreases over timeAdepreciation is less than zeroBgross investment is zeroCgross investment equals net investmentDnet investment is positiveEdepreciation exceeds gross investmentTopicFinancial Institutions and Financial Markets10In January 2008 Tims Gyms Inc owned machines valued at 1 million During the year the market value of themachines fell by 10 percent During 2008 Tim spent 200000 on new machines During 2008 Tims net investmentwasA1 millionB200000C300000D11 millionE100000TopicFinancial Institutions and Financial Markets11The Acme Stereo Company had a capital stock of 24 million at the beginning of the year At the end of the year thefirm had a capital stock of 20 million Thus itsAnet investment was 4 million for the yearBnet investment was some amount but we need more information to determine the amountCgross investment was zeroDdepreciation was 4 millionEnet investment was 4 million for the yearTopicFinancial Institutions and Financial Markets2
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