An economy is enlarging its stock of capital goods:

Question

Quizplus · Accepted Answer

Gross investment represents the total amount of investment made in the economy, which includes both replacement of worn-out capital goods and the addition of new ones. Depreciation represents the amount of wear and tear on existing capital goods. Net investment is the difference between gross investment and depreciation. Therefore, when gross investment exceeds depreciation, net investment is positive, and the economy is enlarging its stock of capital goods. Choice E correctly reflects this relationship.

An Economy Is Enlarging Its Stock of Capital Goods