In an economy, gross investment is ₹500 crore and net investment is zero. What is depreciation?
Answer and explanation
Correct answer: ₹500 crore
Use the identity net investment = gross investment − depreciation. Substituting the values gives 0 = 500 − depreciation, so depreciation must equal ₹500 crore. This is a replacement-only situation: gross investment exactly offsets the loss of existing capital, leaving the capital stock unchanged. The other amounts do not satisfy the stated equation.
Frequently asked questions
What is the correct answer to this question?
₹500 crore
Why is this the correct answer?
Use the identity net investment = gross investment − depreciation. Substituting the values gives 0 = 500 − depreciation, so depreciation must equal ₹500 crore. This is a replacement-only situation: gross investment exactly offsets the loss of existing capital, leaving the capital stock unchanged. The other amounts do not satisfy the stated equation.
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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