If net investment is negative 25 crore and depreciation is 60 crore, what will gross investment be?
Answer and explanation
Correct answer: 35 crore
Use gross investment = net investment + depreciation. Substitution gives gross investment = −25 + 60 = 35 crore. Negative net investment means that gross investment was 25 crore less than depreciation; it does not mean that gross investment itself is negative. Therefore, 35 crore is the correct total investment, while 85 crore results from incorrectly ignoring the negative sign.
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What is the correct answer to this question?
35 crore
Why is this the correct answer?
Use gross investment = net investment + depreciation. Substitution gives gross investment = −25 + 60 = 35 crore. Negative net investment means that gross investment was 25 crore less than depreciation; it does not mean that gross investment itself is negative. Therefore, 35 crore is the correct total investment, while 85 crore results from incorrectly ignoring the negative sign.
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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