In the Solow model, net investment is defined as:
A) investment plus capital depreciation.
B) investment minus capital depreciation.
C) the saving rate minus the depreciation rate.
D) the saving rate plus the depreciation rate.
E) None of these answers is correct.

Question

Quizplus · Accepted Answer

Net investment is defined as the amount of investment in new capital goods minus the amount of capital goods that have become obsolete and been retired (depreciated). Therefore, it is equal to investment minus capital depreciation.

In the Solow Model, Net Investment Is Defined As