If gross investment rises but depreciation rises faster than it, what will normally happen to net investment?
Answer and explanation
Correct answer: Net investment may decrease
Net investment depends on the difference between gross investment and depreciation, not on gross investment alone. If depreciation increases by more than gross investment, this difference becomes smaller, so net investment may decrease. If depreciation becomes greater than gross investment, net investment will even become negative. Therefore, option A is the only valid conclusion.
Frequently asked questions
What is the correct answer to this question?
Net investment may decrease
Why is this the correct answer?
Net investment depends on the difference between gross investment and depreciation, not on gross investment alone. If depreciation increases by more than gross investment, this difference becomes smaller, so net investment may decrease. If depreciation becomes greater than gross investment, net investment will even become negative. Therefore, option A is the only valid conclusion.
Which subject and chapter does this question cover?
This is a Class 11 Economics question. Chapter: National Income and Related Aggregates.
Student feedback
Was this question useful?
👍 0 Helpful 👎 0 Not helpful
Yes 0% No 0%
0 responsesStudent Reviews
No published reviews yet.
