What is the difference between gross investment and net investment?
A)Net investment = gross investment minus taxes
B)Net investment = gross investment minus net factor payments
C)Net investment = gross investment minus inventory accumulation
D)Net investment = gross investment minus depreciation

Question

Quizplus · Accepted Answer

Gross investment refers to the total amount of investment in an economy. Net investment, on the other hand, refers to the increase in the country's stock of capital. This means that net investment takes into account the depreciation of existing capital stock. Therefore, net investment is calculated by subtracting depreciation from gross investment. Thus, D is the correct option as it says Net investment = gross investment minus depreciation.

What Is the Difference Between Gross Investment and Net Investment