If the net increase in capital stock is 125 and depreciation is 75, what will be the gross investment?
Answer and explanation
Correct answer: 200
Gross investment includes both net investment and the capital replaced because of depreciation. Thus, Gross investment = Net investment + Depreciation = 125 + 75 = 200. Therefore, option C is correct. The value 50 is only the difference between the two amounts, while 125 and 75 are separate components, not the total gross investment.
Frequently asked questions
What is the correct answer to this question?
200
Why is this the correct answer?
Gross investment includes both net investment and the capital replaced because of depreciation. Thus, Gross investment = Net investment + Depreciation = 125 + 75 = 200. Therefore, option C is correct. The value 50 is only the difference between the two amounts, while 125 and 75 are separate components, not the total gross investment.
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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