Distinguish between gross investment and net investment. - Vidyadip

Question

Distinguish between gross investment and net investment.

✓

Answer

Gross investment refers to the total addition of capital goods made to the existing stock of capital during a period of time whereas net investment refers to the new capital goods after depreciation/ consumption of fixed capital has been taken into account, i.e.
Gross investment = Net investment + Depreciation.
Net investment = Gross investment - Depreciation.

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