Question

What is Gross Investment \[I_g\]?

Options

• Expenditure on replacing depreciated or worn-out capital goods only

• The portion of gross investment that actually adds to the capital stock

• Total expenditure on new capital goods plus replacement of worn-out capital in a given period

• The planned amount of investment before the event

Answer 1

Gross Investment includes all expenditure on new capital goods during a period. It includes both the actual addition to capital and replacement of worn-out capital.