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Question
Which formula correctly relates Gross Investment, Net Investment and Replacement Investment?
Options
\[I_g=I_n+I_r\]
\[I_r=I_g+I_n\]
\[I_n=I_g+I_r\]
\[I_g=I_n-I_r\]
MCQ
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Solution
Gross Investment equals Net Investment plus Replacement Investment: \[I_g=I_n+I_r\]. Replacement Investment represents depreciation of capital goods.
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