The minimum level of net investment necessary to maintain the stock of capital depends on

Question

Quizplus · Accepted Answer

The minimum level of net investment necessary to maintain the stock of capital depends on the rate of depreciation and the size of the capital stock. This is because capital goods have a finite life, and eventually need to be replaced, so the rate of depreciation determines how much investment is needed just to maintain the existing stock of capital. The size of the capital stock is also important, as a larger capital stock will require more investment just to maintain it than a smaller one. The other options (A, C, and D) are not directly related to the minimum level of net investment needed to maintain the stock of capital.

The Minimum Level of Net Investment Necessary to Maintain the Stock