If gross investment is 250 and net investment is zero, what will depreciation be?
Answer and explanation
Correct answer: 250
Use the identity Net investment = Gross investment − Depreciation. Substituting the given values gives 0 = 250 − Depreciation, so depreciation must be 250. This means the entire gross investment only replaces the capital consumed by depreciation and creates no additional capital. The other options do not satisfy the accounting equation.
Frequently asked questions
What is the correct answer to this question?
250
Why is this the correct answer?
Use the identity Net investment = Gross investment − Depreciation. Substituting the given values gives 0 = 250 − Depreciation, so depreciation must be 250. This means the entire gross investment only replaces the capital consumed by depreciation and creates no additional capital. The other options do not satisfy the accounting equation.
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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