If gross investment is 220 crore rupees and depreciation is 285 crore rupees, which conclusion is correct?
Answer and explanation
Correct answer: Net investment is negative 65 crore rupees
The governing formula is net investment = gross investment − depreciation. Substitution gives 220 − 285 = −65 crore rupees. The negative result means depreciation is greater than new investment, so the capital stock decreases by 65 crore rupees, assuming other factors are unchanged. Therefore, option B is correct; option A loses the negative sign, C adds the figures, and D ignores the shortfall.
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What is the correct answer to this question?
Net investment is negative 65 crore rupees
Why is this the correct answer?
The governing formula is net investment = gross investment − depreciation. Substitution gives 220 − 285 = −65 crore rupees. The negative result means depreciation is greater than new investment, so the capital stock decreases by 65 crore rupees, assuming other factors are unchanged. Therefore, option B is correct; option A loses the negative sign, C adds the figures, and D ignores the shortfall.
Which subject and chapter does this question cover?
This is a Class 12 Economics question. Chapter: National Income and Related Aggregates. Topic: Gross investment and depreciation.
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