What does positive net investment mean?
Answer and explanation
Correct answer: Net increase in capital stock
Net investment equals gross investment minus depreciation. When the result is positive, spending on new capital goods exceeds the value of capital consumed through wear, use, or obsolescence. Therefore the economy adds to its existing stock of machines, buildings, and equipment, increasing productive capacity. It does not mean that consumption is zero or depreciation is negative.
Frequently asked questions
What is the correct answer to this question?
Net increase in capital stock
Why is this the correct answer?
Net investment equals gross investment minus depreciation. When the result is positive, spending on new capital goods exceeds the value of capital consumed through wear, use, or obsolescence. Therefore the economy adds to its existing stock of machines, buildings, and equipment, increasing productive capacity. It does not mean that consumption is zero or depreciation is negative.
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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