Gross investment and depreciation

Correct answer: C. 830 crore rupees

Explanation: The governing identity is net investment = gross investment − depreciation. Rearranging gives depreciation = gross investment − net investment. Substituting the figures, depreciation = 720 − (−110) = 720 + 110 = 830 crore rupees. Thus option C is correct. The negative net investment must be handled carefully: subtracting a negative amount increases the depreciation figure, so 610 crore is based on an incorrect sign.

Correct answer: B. 3 lakh rupees

Explanation: Under the straight-line method, annual depreciation equals depreciable cost divided by useful life. Depreciable cost is original cost minus salvage value: 26 − 2 = 24 lakh rupees. Dividing by 8 years gives 24 ÷ 8 = 3 lakh rupees per year. Therefore option B is correct. Option C results from dividing the original cost without the proper adjustment, while A and D do not follow the formula.

Correct answer: B. ₹750 crore

Explanation: The governing relationship is Net Investment = Gross Investment − Depreciation. Rearranging gives Depreciation = Gross Investment − Net Investment = ₹1,800 crore − ₹1,050 crore = ₹750 crore. Therefore, option B is correct. Option A and C result from incorrect subtraction, while option D adds the two figures instead of finding their difference.

Correct answer: B. Net investment is minus ₹200 crore and capital stock falls

Explanation: Net investment is calculated as Gross Investment − Depreciation. Thus, ₹700 crore − ₹900 crore = −₹200 crore. A negative net investment means that current investment is insufficient to replace the capital that has worn out, so the capital stock declines by ₹200 crore. Hence option B is correct; the other options ignore the negative sign or add the figures incorrectly.

Correct answer: A. 820 crore rupees

Explanation: The governing investment identity is net investment = gross investment − depreciation. The actual increase in the capital stock represents net investment, so 360 = 1,180 − depreciation. Rearranging gives depreciation = 1,180 − 360 = 820 crore rupees. Thus, option A is correct. Option D is the net investment itself, while option B is the gross investment and cannot be the depreciation here.

Correct answer: B. Negative 300 crore rupees

Explanation: Net investment is calculated as gross investment minus depreciation. Depreciation equals 150% of 600 = 600 × 1.5 = 900 crore rupees. Therefore, net investment = 600 − 900 = −300 crore rupees. A negative result means the capital stock falls because replacement needs exceed new investment. Hence, option B is correct; 900 is depreciation, not net investment.

Correct answer: A. Net investment will also rise by 18%

Explanation: Net investment equals gross investment minus depreciation: NI = G − D. If both components increase by the same 18%, the new values are 1.18G and 1.18D. Hence new NI = 1.18G − 1.18D = 1.18(G − D) = 1.18NI. Therefore, net investment also increases by 18%. It does not rise by 36%, because the two changes are not added; depreciation is subtracted.

Correct answer: A. 540 crore rupees

Explanation: The difference between GDP and NDP is depreciation: 9,400 − 8,820 = 580 crore rupees. Net investment equals gross investment minus depreciation, so it is 1,120 − 580 = 540 crore rupees. Therefore, option A is correct. Option B is only the depreciation amount, while option C is gross rather than net investment.

Correct answer: C. 990 crore rupees

Explanation: The accounting identity is net investment = gross investment − depreciation. Rearranging gives depreciation = gross investment − net investment. Substituting the figures, depreciation = 850 − (−140) = 990 crore rupees. The negative net investment must be handled carefully; it increases the required depreciation amount. Therefore, option C is correct.

Correct answer: B. 3 lakh rupees

Explanation: The governing accounting concept is straight-line depreciation, which spreads the depreciable amount evenly across the useful life. Depreciable amount = cost − salvage value = ₹34 lakh − ₹4 lakh = ₹30 lakh. Annual depreciation = ₹30 lakh ÷ 10 = ₹3 lakh per year, so option B is correct. Option C incorrectly divides the full cost by ten, while A and D use unsupported amounts.

Correct answer: A. When net investment is negative

Explanation: Capital stock changes according to net investment, which equals gross investment minus depreciation. If depreciation is greater than gross investment, net investment becomes negative and the existing capital stock declines. Current NDP can still rise because current production and the capital stock are different concepts. Therefore, option A is correct; the other choices describe conditions that generally increase capital stock.

Correct answer: A. It may rise because inventory investment is part of production

Explanation: GDP records production during the period, not merely completed sales to final consumers. When a firm produces final goods that remain unsold, the goods are recorded as an increase in inventories, which is a component of gross private investment in the expenditure approach. If the inventory quantity increases and prices are held constant for real measurement, real GDP may therefore rise. Unsold goods are not automatically imports, and lack of sale does not exclude them from current production. Thus A is correct.