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Capital + Interest R
Chapter 20
| Term | Definition |
|---|---|
| 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. |