Consider the equilibrium of the production model. A destruction of a fraction of the capital stock following a natural disaster leads to an increase of the real rental price of capital.
What is stock?
- Stock in the financial industry refers to the shares into which ownership of a corporation or company is divided.
- A single share of stock represents a fractional ownership interest in the company based on the total number of shares.
- The shareholder (stockholder) will then typically be entitled to that portion of the company's earnings, proceeds from the sale of company assets (after paying off all senior claims such as secured and unsecured debt), or voting rights, with these rights frequently being distributed in proportion to the amount of money each stockholder has invested.
What does a country's capital stock mean?
- The capital stock is a comprehensive measurement of the physical capital that is currently present in an economy.
- According to economic theory, a nation's capital stock should rise as it develops and becomes wealthy.
- Perpetual inventory is typically used to calculate capital stock.
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