Let capital formation = CF, Production = P, C = consumption. Then CF =_______
A.
P - C
B.
P + C
C.
PC
D.
P/C
Correct Answer: Option A
Explanation
Capital Formation or capital accumulation refers to increasing a country's stock of real capital. There must be increase in savings and reduction in consumption of consumer goods i.e consumption must be subtracted from production.
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