The difference between gross and net investment is referred to as:
A)a personal tax.
B)the income earned but not received.
C)a capital consumption allowance.
D)an indirect business tax.
E)a statistical discrepancy.

Question

Quizplus · Accepted Answer

The difference between gross and net investment is referred to as capital consumption allowance, which represents the amount of investment that is necessary to maintain existing capital stock. Gross investment includes all investment, including that which is needed to replace depreciated capital. Net investment is the amount of investment that adds to the existing capital stock. The capital consumption allowance accounts for the loss in value due to depreciation, wear and tear, and other factors, and is deducted from gross investment to arrive at net investment.

The Difference Between Gross and Net Investment Is Referred to As