If gross investment is twice depreciation, what will be the relation between net investment and depreciation?
Answer and explanation
Correct answer: Net investment will equal depreciation
Let depreciation be D. Gross investment is then 2D. Using net investment = gross investment − depreciation, we get net investment = 2D − D = D. Thus net investment equals depreciation. It is not twice depreciation, zero, or negative because one depreciation amount remains after subtracting one amount from two.
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What is the correct answer to this question?
Net investment will equal depreciation
Why is this the correct answer?
Let depreciation be D. Gross investment is then 2D. Using net investment = gross investment − depreciation, we get net investment = 2D − D = D. Thus net investment equals depreciation. It is not twice depreciation, zero, or negative because one depreciation amount remains after subtracting one amount from two.
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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