Asked by Jessica Colley on Jun 09, 2024
Verified
If gross investment is less 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 capital expenditure a company spends on maintaining and increasing the scope of its operations.
Net Investment
The total spending on new fixed investment minus depreciation on existing physical assets.
Depreciation
The process of allocating the cost of a tangible asset over its useful life, reflecting the decrease in value due to use, wear and tear, or obsolescence.
- Examine the nexus between consumption, disposable income, and investment.
- Identify the factors that influence investment decisions.
Verified Answer
TM
Tannya MunozJun 13, 2024
Final Answer :
D
Explanation :
Net investment is calculated by subtracting depreciation from gross investment. If gross investment is less than depreciation, it means that there is a negative net investment. This is because the amount of investment is not sufficient to replace the depreciated assets, implying that the economy is shrinking.
Learning Objectives
- Examine the nexus between consumption, disposable income, and investment.
- Identify the factors that influence investment decisions.