Which option is a correct example of gross investment?
Answer and explanation
Correct answer: Construction of a new factory building
Gross investment is total spending on newly produced or acquired capital goods before depreciation is deducted. Constructing a new factory building creates a productive fixed asset and is therefore gross investment. A machine wearing out and an old building losing value are depreciation, while wages are payments for labour services rather than fixed-capital formation.
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What is the correct answer to this question?
Construction of a new factory building
Why is this the correct answer?
Gross investment is total spending on newly produced or acquired capital goods before depreciation is deducted. Constructing a new factory building creates a productive fixed asset and is therefore gross investment. A machine wearing out and an old building losing value are depreciation, while wages are payments for labour services rather than fixed-capital formation.
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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