Which option shows a situation of only replacement investment?
Answer and explanation
Correct answer: Gross investment 60 and depreciation 60
Only replacement investment occurs when gross investment exactly equals depreciation. In option B, net investment is 60 − 60 = 0, so worn-out capital is replaced but no extra capital is added. Options A and D have positive net investment and therefore show expansion, while C has negative net investment because depreciation exceeds gross investment.
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What is the correct answer to this question?
Gross investment 60 and depreciation 60
Why is this the correct answer?
Only replacement investment occurs when gross investment exactly equals depreciation. In option B, net investment is 60 − 60 = 0, so worn-out capital is replaced but no extra capital is added. Options A and D have positive net investment and therefore show expansion, while C has negative net investment because depreciation exceeds 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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