Maintaining capital intact

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Updated: Aug 20, 2021

Making good the stock of capital consumed in production. This is a concept used in economic theory and national accounting in which ‘true’ depreciation is used to restore the income-producing capacity of capital so that, e.g., a measure of net domestic product or net investment can be made, i.e. the gross domestic product or gross investment less an estimate of capital consumption. Net domestic product would thus measure total output white maintaining the nation’s capita! intact, while net investment would measure the net addition to the nation’s stock of capital over the period.

Reference: The Penguin Dictionary of Economics, 3rd edt.



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James Knight
Editor of Education
James is the Editor of Education for Invezz, where he covers topics from across the financial world, from the stock market, to cryptocurrency, to macroeconomic markets.... read more.