Suppose that in 2009,private investment spending was $500 billion,government investment was $300 billion,and depreciation was $250 billion.How much did the capital stock increase in 2009 (assume there were no other changes that affect the capital stock)?

Question

Quizplus · Accepted Answer

The capital stock increases by the net investment, which is the total investment minus depreciation. Total investment is the sum of private and government investment: $500 billion + $300 billion = $800 billion. Subtracting depreciation ($250 billion) gives a net increase of $550 billion.

Suppose That in 2009,private Investment Spending Was $500 Billion,government Investment