In 2007, Franceʹs GDP totalled $1.9 trillion and in 2006 GDP was $1.8 trillion. The total amount spent on new capital in 2007 was $357 billion and in 2006 was $335 billion. Suppose that depreciation is 12 percent of GDP. investment in 2006 was billion.
A) Gross; $216
B) Gross; $357
C) Gross; $335
D) Net; $216

Question

Quizplus · Accepted Answer

We need to find the investment in 2006, which we can do by using the formula:

Investment = Change in Capital + Depreciation

We are given the following information:

- GDP in 2007 = $1.9 trillion 
- GDP in 2006 = $1.8 trillion 
- Total amount spent on new capital in 2007 = $357 billion 
- Total amount spent on new capital in 2006 = $335 billion 
- Depreciation is 12% of GDP

First, we can calculate the amount of depreciation for both years:

Depreciation in 2007 = 0.12 x $1.9 trillion = $228 billion 
Depreciation in 2006 = 0.12 x $1.8 trillion = $216 billion

Next, we can use the formula to find the investment in 2006:

Investment in 2006 = $335 billion + $216 billion = $551 billion

Therefore, the correct answer is C. Gross; $335.

In 2007, Franceʹs GDP Totalled $1