If gross investment in a country is 350 and depreciation is 110, what will net investment be?
Answer and explanation
Correct answer: 240
The standard formula is Net investment = Gross investment − Depreciation. Substituting the values gives 350 − 110 = 240. The positive result means that after replacing the capital lost through depreciation, 240 units of additional capital are added to the capital stock. The value 460 is incorrect because depreciation must be deducted, not added.
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What is the correct answer to this question?
240
Why is this the correct answer?
The standard formula is Net investment = Gross investment − Depreciation. Substituting the values gives 350 − 110 = 240. The positive result means that after replacing the capital lost through depreciation, 240 units of additional capital are added to the capital stock. The value 460 is incorrect because depreciation must be deducted, not added.
Which subject and chapter does this question cover?
This is a Class 11 Economics question. Chapter: National Income and Related Aggregates.
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