Question

What is Net Investment \[I_n\]?

Options

• Expenditure on replacing depreciated or worn-out capital goods

• Investment that remains the same in boom and recession

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

• Total expenditure on new capital goods plus replacement of worn-out capital

Answer 1

Net Investment is the part of gross investment that adds to the capital stock. It is obtained after subtracting depreciation or replacement investment.