In which option is capital stock most likely to fall?
Answer and explanation
Correct answer: Gross investment 50 and depreciation 90
Capital stock is likely to fall when net investment is negative, meaning depreciation exceeds gross investment. In option C, net investment = 50 − 90 = −40. Option B gives zero net investment, so capital is maintained, while A and D give positive net investment and indicate growth. Hence option C shows the clearest decline in the capital stock.
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What is the correct answer to this question?
Gross investment 50 and depreciation 90
Why is this the correct answer?
Capital stock is likely to fall when net investment is negative, meaning depreciation exceeds gross investment. In option C, net investment = 50 − 90 = −40. Option B gives zero net investment, so capital is maintained, while A and D give positive net investment and indicate growth. Hence option C shows the clearest decline in the capital stock.
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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