What is replacement investment?

Question

Quizplus · Accepted Answer

Replacement investment refers to the investment made to replace capital goods that have worn out or become obsolete. Thus, option B is the correct choice. Option A is incorrect as it talks about investment made to expand capital beyond the present level. Option C is incorrect as it refers to the dollar value of worn-out plants and equipment, which may not be equal to the investment required to replace them. Option D is incorrect as it defines the gross fixed capital formation, which is the sum of the value of all new fixed assets produced in a year.

What Is Replacement Investment