If gross investment is sixty and depreciation is sixty, what will net investment be?
Answer and explanation
Correct answer: Zero
Use the formula net investment = gross investment − depreciation. Substitution gives 60 − 60 = 0. This means investment is exactly sufficient to replace the capital consumed during the period, so there is no additional net increase in the capital stock. Adding the figures or choosing either single figure ignores the required subtraction.
Frequently asked questions
What is the correct answer to this question?
Zero
Why is this the correct answer?
Use the formula net investment = gross investment − depreciation. Substitution gives 60 − 60 = 0. This means investment is exactly sufficient to replace the capital consumed during the period, so there is no additional net increase in the capital stock. Adding the figures or choosing either single figure ignores the required subtraction.
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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