If net investment is 70 crore and depreciation is 45 crore, what will gross investment be?
Answer and explanation
Correct answer: 115 crore
Gross investment includes both the net addition to capital and the amount required to replace depreciated capital. Therefore, gross investment = net investment + depreciation. Substituting the values gives 70 + 45 = 115 crore. The value 25 would result from an incorrect subtraction, while 70 and 45 are only the two separate components, not their combined gross amount.
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What is the correct answer to this question?
115 crore
Why is this the correct answer?
Gross investment includes both the net addition to capital and the amount required to replace depreciated capital. Therefore, gross investment = net investment + depreciation. Substituting the values gives 70 + 45 = 115 crore. The value 25 would result from an incorrect subtraction, while 70 and 45 are only the two separate components, not their combined gross amount.
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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