Which of the following statements about depreciation is correct?

Question

Quizplus · Accepted Answer

Net investment is the amount of investment that remains after depreciation is deducted from gross investment. Therefore, net investment is equal to gross investment minus depreciation. Option A is incorrect because depreciation is actually a decrease in the value of capital goods over time, and does not add to the total stock of capital. Option B is also incorrect because depreciation refers to the reduction in the value of capital goods, rather than the total amount of capital goods. Option D is incorrect because adding depreciation to gross investment would result in a higher total investment, which would be incorrect. Option E is incorrect because depreciation and net investment are not equal.

Which of the Following Statements About Depreciation Is Correct