Question

What happens to the stock of machines when new machines are added or old machines are not replaced?

Options

• Neither additions nor deductions can occur in capital stock

• Additions occur when new machines are added, and deductions occur when machines fall into disuse and are not replaced

• Only additions occur, because machines never fall into disuse

• Only deductions occur, because new machines are intermediate goods

Answer 1

New machines increase the stock through additions. Machines that fall into disuse and are not replaced create deductions from the stock.