If gross investment in 2016 is $525 billion and depreciation in 2016 is $650 billion, net investment in 2016 is
A) -$650 billion.
B) -$125 billion.
C) $125 billion.
D) $1,175 billion.

Question

Quizplus · Accepted Answer

Net investment is calculated by subtracting depreciation from gross investment, so Net Investment = Gross Investment - Depreciation = $525 billion - $650 billion = -$125 billion. Since the result is negative, it means that there was a net decrease in the capital stock.

If Gross Investment in 2016 Is $525 Billion and Depreciation