Gross domestic capital formation is always greater than gross fixed capital formation
True or False with Reasons:
Gross domestic capital formation is always greater than gross fixed capital formation.
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False,
Gross Domestic Capital Formation can be less than Gross Fixed Capital Formation if a change in stock is negative, i.e., when opening stock is more than closing stock.
Explanation:-
Gross Domestic Capital Formation = Gross Fixed Capital Formation + Change in Stock (closing stock – opening stock)
If change in stock is negative, gross domestic capital formation will be less than the gross fixed capital formation.
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