Asked by Grace Hummel on Apr 24, 2024
Verified
If gross investment is greater than depreciation,then net investment is _____________ and the economy is __________________.
A) positive,expanding
B) positive,shrinking
C) negative,expanding
D) negative,shrinking
Gross Investment
The total amount of investment in capital goods in an economy over a specific period, not accounting for depreciation.
Depreciation
A reduction in the value of an asset over time due to wear and tear or obsolescence.
Net Investment
The net expenditure on acquiring new capital assets after deducting the depreciation of the present capital assets.
- Learn about the distinctions between gross and net investment and their importance for the economy.
- Evaluate the association between savings, investment, and the advancement of the economy.
Verified Answer
MR
Melissa RamosMay 02, 2024
Final Answer :
A
Explanation :
Gross investment refers to the total amount of investment made by an economy in a specific time period while depreciation refers to the decrease in the value of capital due to wear and tear. Net investment is calculated by subtracting the amount of depreciation from gross investment. If gross investment is greater than depreciation, then net investment would be positive, indicating that the economy is increasing its stock of capital. This implies economic expansion since the economy has more resources to produce goods and services in the future. Therefore, the correct answer is A) positive, expanding.
Learning Objectives
- Learn about the distinctions between gross and net investment and their importance for the economy.
- Evaluate the association between savings, investment, and the advancement of the economy.