Lecture 27 - Announcement s H W for ch. 11-13 due M onday H...

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Announcements HW for ch. 11-13 due Monday HW for ch 14 due next Thursday MT2 scores up on BB (in gradebook) MT2 with answers up on BB
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2 of 32 CAPI TAL, I NVESTM ENT, AND DEPRECI ATI ON CAPI TAL-Ch. 13 capital Those goods produced by the economic system that are used as inputs to produce other goods and services in the future.
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3 of 32 CAPI TAL, I NVESTM ENT, AND DEPRECI ATI ON Tangible Capital physical, or tangible, capital Material things used as inputs in the production of future goods and services. The major categories of physical capital are nonresidential structures, durable equipment, residential structures, and inventories. I nventories Inputs or outputs that the firm has on hand or in storage.
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4 of 32 CAPI TAL, I NVESTM ENT, AND DEPRECI ATI ON Social Capital: I nfrastructure social capital, or infrastructure Capital that provides services to the public. Most social capital takes the form of public works (roads and bridges) and public services (police and fire protection). This social capital is used in the production process by facilitating the transport of inputs and outputs.
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5 of 32 CAPI TAL, I NVESTM ENT, AND DEPRECI ATI ON I ntangible Capital intangible capital Nonmaterial things that contribute to the output of future goods and services. human capital A form of intangible capital that includes the skills and other knowledge that workers have or acquire through education and training and that yields valuable services to a firm over time.
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6 of 32 CAPI TAL, I NVESTM ENT, AND DEPRECI ATI ON Measuring Capital When we speak of capital, we refer not to money or to financial assets such as bonds and stocks, but instead to the firm’s physical plant, equipment, inventory, and intangible assets. capital stock For a single firm, the current market value of the firm’s plant, equipment, inventories, and intangible assets.
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7 of 32 CAPI TAL, I NVESTM ENT, AND DEPRECI ATI ON investment New capital additions to a firm’s capital stock. Although capital is measured at a given point in time (a stock), investment is measured over a period of time (a flow). The flow of investment increases the capital stock. I NVESTMENT AND DEPRECI ATI ON depreciation The decline in an asset’s economic value over time. The change in capital stock is equal to investment-depreciation.
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8 of 32 THE CAPI TAL MARKET capital market The market in which households supply their savings to firms that demand funds to buy capital goods. (Part of the “market for loanable funds)” The funds that firms use to buy capital goods come, directly or indirectly, from households. When a household decides not to consume a portion of its income, it saves. Investment by firms is the
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Lecture 27 - Announcement s H W for ch. 11-13 due M onday H...

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