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# Capital + Interest R

### Chapter 20

TermDefinition
Capital Anything made by man is used to produce goods and services.
Capital Deepening An increase in the use of capital which increases the ratio of capital to labour.
Capital Goods Those goods used in the production of other goods.
Capital Widening An increase in the use of capital which leaves the ratio of capital to labour unchanged.
Consumer Goods Those goods that give consumers utility and for which they are willing to pay a price.
Investment The process of adding to the stock of capital
Investment Ratio Gross investment as a percentage of GNP.
Liquidity Preference The desire of an individual to hold his/her wealth cash form.
WMarginal Efficiency of capital The extra profit earned as a result of the employment of an extra unit of captial.
Nominal Rate of Interest The rate of interest received by the saver.
Saving That part of income that is not spent.
Real Rate of Interest The nominal rate of interest minus the rate of inflation.
Created by: jmartineconomics
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