If gross investment is ninety and net investment is sixty, what will depreciation be?
Answer and explanation
Correct answer: Thirty
Start with net investment = gross investment − depreciation. Rearranging gives depreciation = gross investment − net investment. Substitution gives 90 − 60 = 30. Thus thirty units of capital were consumed through depreciation, while sixty units remained as the net addition. Adding 90 and 60 would contradict the accounting identity.
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What is the correct answer to this question?
Thirty
Why is this the correct answer?
Start with net investment = gross investment − depreciation. Rearranging gives depreciation = gross investment − net investment. Substitution gives 90 − 60 = 30. Thus thirty units of capital were consumed through depreciation, while sixty units remained as the net addition. Adding 90 and 60 would contradict the accounting identity.
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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