A nation's stock of capital goods will decline when:
A)gross investment exceeds net investment.
B)net investment is positive, but less than gross investment.
C)depreciation exceeds gross investment.
D)gross investment exceeds depreciation.

Question

Quizplus · Accepted Answer

Depreciation refers to the wear and tear of capital goods over time, while gross investment refers to the total amount invested in new capital goods. Therefore, if depreciation exceeds gross investment, the nation's stock of capital goods will decline.

A Nation's Stock of Capital Goods Will Decline When