Asked by Evlyn Torgerson on May 07, 2024

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Whenever the level of depreciation exceeds the gross private domestic investment for the economy

A) net investment is negative.
B) net foreign investment is negative.
C) real gross national product is falling.
D) no conclusion can be made about any of these sectors of the economy.
E) none of the above.

Depreciation

Depreciation is the allocation of the cost of a tangible asset over its service life, reflecting the decrease in value due to wear and tear, age, or obsolescence.

Net Investment

The difference between total investment in new physical assets and depreciation on existing assets, indicating the net increase in the capital stock of an economy.

Economy

A system of production, distribution, and consumption of goods and services within a region or country.

  • Analyze the relationship between depreciation and net investment and their implications for the economy.
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AM
Ashley MendenallMay 13, 2024
Final Answer :
A
Explanation :
This is because gross private domestic investment is a part of the calculation for net investment, which is determined by subtracting the level of depreciation from gross private domestic investment. If depreciation exceeds gross private domestic investment, the result would be a negative net investment, indicating that the economy is not investing enough to maintain or grow its capital stock.