UPSC Exam > UPSC Questions > Consider the following statements.1. Investm...
Start Learning for Free
Consider the following statements.
1. Investment decisions by producers, such as whether to buy a new machine, depend, to a large extent, on the market rate of interest
2. Machines produced in an economy in a given year are not ‘used up’ to produce other goods but yield their services over a number of years
Which of these statements are correct?
- a)1 Only
- b)2 Only
- c)Both 1 and 2
- d)None of them
Correct answer is option 'C'. Can you explain this answer?
| FREE This question is part of | Download PDF Attempt this Test |
Verified Answer
Consider the following statements.1. Investment decisions by producer...
- Investment is defined as addition to the stock of physical capital (such as machines, buildings, roads etc., i.e. anything that adds to the future productive capacity of the economy) and changes in the inventory (or the stock of finished goods) of a producer.
- Note that ‘investment goods’ (such as machines) are also part of the final goods – they are not intermediate goods like raw materials. Machines produced in an economy in a given year are not ‘used up’ to produce other goods but yield their services over a number of years.
- Investment decisions by producers, such as whether to buy a new machine, depend, to a large extent, on the market rate of interest. However, for simplicity, we assume here that firms plan to invest the same amount every year.
Most Upvoted Answer
Consider the following statements.1. Investment decisions by producer...
Statement 1: Investment decisions by producers, such as whether to buy a new machine, depend, to a large extent, on the market rate of interest.
- The statement is correct. Investment decisions made by producers are influenced by the market rate of interest. When the market interest rate is low, it becomes cheaper for producers to borrow money for investment purposes. This encourages them to invest in new machines, expand their production capacity, and undertake other investment projects. On the other hand, when the market interest rate is high, borrowing becomes more expensive, which may discourage producers from making new investments.
Statement 2: Machines produced in an economy in a given year are not ‘used up’ to produce other goods but yield their services over a number of years.
- The statement is correct. Machines are considered capital goods and are used in the production of other goods and services. Unlike consumer goods that are typically used up or consumed in the production process, machines are durable and can be used over a number of years. They provide their services to the production process, contributing to the production of goods and services.
- Machines are used to increase the productivity of labor and to enhance the efficiency of the production process. They help in reducing production costs, increasing output, and improving the quality of goods produced. Therefore, machines are considered as investments by producers as they provide a stream of benefits over their useful life.
- The useful life of machines can vary depending on the type of machine, its maintenance, technological advancements, and other factors. Some machines may become obsolete or less efficient over time and may need to be replaced. However, in general, machines are expected to provide their services over a number of years, making them valuable assets for producers.
- The durability and longevity of machines also have implications for investment decisions. Since machines provide services over a long period, producers need to consider the future benefits and costs associated with their acquisition. They need to assess the return on investment, taking into account the initial cost of the machine, its expected useful life, and the benefits it will provide in terms of increased productivity and cost savings.
- In summary, both statements are correct. Investment decisions by producers are influenced by the market rate of interest, and machines produced in an economy are not 'used up' but yield their services over a number of years.
- The statement is correct. Investment decisions made by producers are influenced by the market rate of interest. When the market interest rate is low, it becomes cheaper for producers to borrow money for investment purposes. This encourages them to invest in new machines, expand their production capacity, and undertake other investment projects. On the other hand, when the market interest rate is high, borrowing becomes more expensive, which may discourage producers from making new investments.
Statement 2: Machines produced in an economy in a given year are not ‘used up’ to produce other goods but yield their services over a number of years.
- The statement is correct. Machines are considered capital goods and are used in the production of other goods and services. Unlike consumer goods that are typically used up or consumed in the production process, machines are durable and can be used over a number of years. They provide their services to the production process, contributing to the production of goods and services.
- Machines are used to increase the productivity of labor and to enhance the efficiency of the production process. They help in reducing production costs, increasing output, and improving the quality of goods produced. Therefore, machines are considered as investments by producers as they provide a stream of benefits over their useful life.
- The useful life of machines can vary depending on the type of machine, its maintenance, technological advancements, and other factors. Some machines may become obsolete or less efficient over time and may need to be replaced. However, in general, machines are expected to provide their services over a number of years, making them valuable assets for producers.
- The durability and longevity of machines also have implications for investment decisions. Since machines provide services over a long period, producers need to consider the future benefits and costs associated with their acquisition. They need to assess the return on investment, taking into account the initial cost of the machine, its expected useful life, and the benefits it will provide in terms of increased productivity and cost savings.
- In summary, both statements are correct. Investment decisions by producers are influenced by the market rate of interest, and machines produced in an economy are not 'used up' but yield their services over a number of years.
Attention UPSC Students!
To make sure you are not studying endlessly, EduRev has designed UPSC study material, with Structured Courses, Videos, & Test Series. Plus get personalized analysis, doubt solving and improvement plans to achieve a great score in UPSC.
|
Explore Courses for UPSC exam
|
|
Similar UPSC Doubts
Top Courses for UPSCView all
Consider the following statements.1. Investment decisions by producers, such as whether to buy a new machine, depend, to a large extent, on the market rate of interest2. Machines produced in an economy in a given year are not ‘used up’ to produce other goods but yield their services over a number of yearsWhich of these statements are correct?a) 1 Onlyb) 2 Onlyc) Both 1 and 2d) None of themCorrect answer is option 'C'. Can you explain this answer?
Question Description
Consider the following statements.1. Investment decisions by producers, such as whether to buy a new machine, depend, to a large extent, on the market rate of interest2. Machines produced in an economy in a given year are not ‘used up’ to produce other goods but yield their services over a number of yearsWhich of these statements are correct?a) 1 Onlyb) 2 Onlyc) Both 1 and 2d) None of themCorrect answer is option 'C'. Can you explain this answer? for UPSC 2024 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about Consider the following statements.1. Investment decisions by producers, such as whether to buy a new machine, depend, to a large extent, on the market rate of interest2. Machines produced in an economy in a given year are not ‘used up’ to produce other goods but yield their services over a number of yearsWhich of these statements are correct?a) 1 Onlyb) 2 Onlyc) Both 1 and 2d) None of themCorrect answer is option 'C'. Can you explain this answer? covers all topics & solutions for UPSC 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Consider the following statements.1. Investment decisions by producers, such as whether to buy a new machine, depend, to a large extent, on the market rate of interest2. Machines produced in an economy in a given year are not ‘used up’ to produce other goods but yield their services over a number of yearsWhich of these statements are correct?a) 1 Onlyb) 2 Onlyc) Both 1 and 2d) None of themCorrect answer is option 'C'. Can you explain this answer?.
Consider the following statements.1. Investment decisions by producers, such as whether to buy a new machine, depend, to a large extent, on the market rate of interest2. Machines produced in an economy in a given year are not ‘used up’ to produce other goods but yield their services over a number of yearsWhich of these statements are correct?a) 1 Onlyb) 2 Onlyc) Both 1 and 2d) None of themCorrect answer is option 'C'. Can you explain this answer? for UPSC 2024 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about Consider the following statements.1. Investment decisions by producers, such as whether to buy a new machine, depend, to a large extent, on the market rate of interest2. Machines produced in an economy in a given year are not ‘used up’ to produce other goods but yield their services over a number of yearsWhich of these statements are correct?a) 1 Onlyb) 2 Onlyc) Both 1 and 2d) None of themCorrect answer is option 'C'. Can you explain this answer? covers all topics & solutions for UPSC 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Consider the following statements.1. Investment decisions by producers, such as whether to buy a new machine, depend, to a large extent, on the market rate of interest2. Machines produced in an economy in a given year are not ‘used up’ to produce other goods but yield their services over a number of yearsWhich of these statements are correct?a) 1 Onlyb) 2 Onlyc) Both 1 and 2d) None of themCorrect answer is option 'C'. Can you explain this answer?.
Solutions for Consider the following statements.1. Investment decisions by producers, such as whether to buy a new machine, depend, to a large extent, on the market rate of interest2. Machines produced in an economy in a given year are not ‘used up’ to produce other goods but yield their services over a number of yearsWhich of these statements are correct?a) 1 Onlyb) 2 Onlyc) Both 1 and 2d) None of themCorrect answer is option 'C'. Can you explain this answer? in English & in Hindi are available as part of our courses for UPSC.
Download more important topics, notes, lectures and mock test series for UPSC Exam by signing up for free.
Here you can find the meaning of Consider the following statements.1. Investment decisions by producers, such as whether to buy a new machine, depend, to a large extent, on the market rate of interest2. Machines produced in an economy in a given year are not ‘used up’ to produce other goods but yield their services over a number of yearsWhich of these statements are correct?a) 1 Onlyb) 2 Onlyc) Both 1 and 2d) None of themCorrect answer is option 'C'. Can you explain this answer? defined & explained in the simplest way possible. Besides giving the explanation of
Consider the following statements.1. Investment decisions by producers, such as whether to buy a new machine, depend, to a large extent, on the market rate of interest2. Machines produced in an economy in a given year are not ‘used up’ to produce other goods but yield their services over a number of yearsWhich of these statements are correct?a) 1 Onlyb) 2 Onlyc) Both 1 and 2d) None of themCorrect answer is option 'C'. Can you explain this answer?, a detailed solution for Consider the following statements.1. Investment decisions by producers, such as whether to buy a new machine, depend, to a large extent, on the market rate of interest2. Machines produced in an economy in a given year are not ‘used up’ to produce other goods but yield their services over a number of yearsWhich of these statements are correct?a) 1 Onlyb) 2 Onlyc) Both 1 and 2d) None of themCorrect answer is option 'C'. Can you explain this answer? has been provided alongside types of Consider the following statements.1. Investment decisions by producers, such as whether to buy a new machine, depend, to a large extent, on the market rate of interest2. Machines produced in an economy in a given year are not ‘used up’ to produce other goods but yield their services over a number of yearsWhich of these statements are correct?a) 1 Onlyb) 2 Onlyc) Both 1 and 2d) None of themCorrect answer is option 'C'. Can you explain this answer? theory, EduRev gives you an
ample number of questions to practice Consider the following statements.1. Investment decisions by producers, such as whether to buy a new machine, depend, to a large extent, on the market rate of interest2. Machines produced in an economy in a given year are not ‘used up’ to produce other goods but yield their services over a number of yearsWhich of these statements are correct?a) 1 Onlyb) 2 Onlyc) Both 1 and 2d) None of themCorrect answer is option 'C'. Can you explain this answer? tests, examples and also practice UPSC tests.
|
|
Explore Courses for UPSC exam
|
|
Signup for Free!
Signup to see your scores go up within 7 days! Learn & Practice with 1000+ FREE Notes, Videos & Tests.
|
© EduRev
|
Education Revolution
|
Follow Us
|
Signup to see your scores
go up within 7 days!
Access 1000+ FREE Docs, Videos and Tests
Takes less than 10 seconds to signup