Net investment equals

Question

Quizplus · Accepted Answer

Net investment is the difference between gross investment (the total amount spent on new capital goods) and depreciation (the value of capital goods that have worn out or become obsolete). Therefore, the formula for net investment is gross investment minus depreciation. Option A is incorrect because it only considers the capital stock (the total quantity of plant, equipment and buildings) and not the changes in it due to depreciation. Option C is incorrect because it does not take into account the decrease in the value of existing capital goods due to depreciation. Option D is also incorrect because it does not account for depreciation or changes in the capital stock over time.

Net Investment Equals