What is the relationship between gross investment, net investment, and depreciation? Which measures the change in the capital stock?
What will be an ideal response?
Gross investment minus depreciation equals net investment. Gross investment is all the investment made during the year. Depreciation is the wear and tear on capital from its use and obsolescence. The "depreciation part" of gross investment goes to replace old, worn out capital and so net investment is the change in the capital stock.
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Suppose the quantity demanded of ice cream cones increases from 400 to 425 cones a day when the price is reduced from $1.50 to $1.25. In this situation, the elasticity of demand, calculated using the average method, is
A) 3. B) 1. C) 0.33. D) 1.33.
A key reason for low foreign direct investment in developing nations is:
a. the presence of tariff and non tariff barriers on imports. b. the fear of exploitation of domestic resources by foreign owners. c. the lack of government-operated enterprises. d. the high interest rate charged on loans. e. the fear of falling inflation rates.