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      Question

      Regarding capital formation which of the following is

      correct? Statement 1 : High capital output ratio indicates efficient use of capital Statement 2 : Net capital formation adds depreciation from total investments Statement 3 : Capital formation reflects the productivity of capital in the economy
      A Statement 1 only Correct Answer Incorrect Answer
      B Statement 1 and 2 only Correct Answer Incorrect Answer
      C Statement 1 and 3 only Correct Answer Incorrect Answer
      D Statement 2 and 3 only Correct Answer Incorrect Answer
      E All are correct Correct Answer Incorrect Answer

      Solution

      Rate of Capital Formation = (Investments /GDP) X 100 Net capital formation deduct depreciation from total investments

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