Why does it matter for the price of assets that the stock of existing assets is much greater than the flow of newly produced assets?

Economics Nov 04, 2020

Expert Solution

It is extremely important for the existing stock of assets that their stock is much greater than the flow of newly produced assets since their value depends on it. If the flow of newly produced asets is much higher than the existing stock, the price of the existing stocks will crater which will inevitably reduce to a reduction in their valuation.

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