If repair of a machine only keeps it in normal working condition, why is it not treated as a new net capital addition?
Answer and explanation
Correct answer: Because it is related only to covering wear and tear
Routine repair restores a machine to its previous working condition but does not create productive capacity beyond the existing capital stock. It therefore covers deterioration or depreciation rather than representing a net addition. Net investment would arise from a new productive asset, extra capacity, or an improvement that increases capital services beyond the earlier level. The other options describe unrelated categories.
Frequently asked questions
What is the correct answer to this question?
Because it is related only to covering wear and tear
Why is this the correct answer?
Routine repair restores a machine to its previous working condition but does not create productive capacity beyond the existing capital stock. It therefore covers deterioration or depreciation rather than representing a net addition. Net investment would arise from a new productive asset, extra capacity, or an improvement that increases capital services beyond the earlier level. The other options describe unrelated categories.
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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