Question

Gross investment can be equal to net investment.

• A. True
• B. False

Answer 1

The correct option is B False

Gross investment is the total addition made to the capital stock of an economy over a given period of time whereas net investment is the actual addition made to the capital stock of an economy. The only difference between gross and net investment is the depreciation of capital assets that happens over a period of time. Gross investment consists of depreciation whereas net investment does not include depreciation. Hence, if depreciation is deducted from gross investment it can be equal to net investment.