If gross investment is greater than depreciation in any period, then net investment is positive and the capital stock increases. If gross investment is less than depreciation in any period, then net investment is negative and the capital stock declines.
What happens if the gross investment is less than the depreciation?
If gross investment is less than depreciation in any period, then net investment is negative and the capital stock declines. In the official estimates of total output, gross investment (GPDI) minus depreciation equals net private domestic investment (NPDI).
What is the aggregate output of the economy?
-annual total output of goods and services Aggregate output is the primary measure of the economy's: -annual total output of goods and services -annual total output of goods and services adjusted for inflation -annual marginal output of goods and services -annual total output of goods and services expressed in real terms -gross domestic product
What does gross private domestic investment consist of?
Gross private domestic investment consists of: Check all that apply: -any changes in inventories -durable goods and nondurable goods -spending on new plant and equipment during the year -newly produced housing -services
What is the view of GDP as the sum of money?
The view of GDP as the sum of money spent on purchases is called: -the income approach -the expenditure approach -the capital approach -the buying approach income Viewing GDP in terms of earning derived or created by producing something is called the _______ approach -Statistical discrepancy
What happens when gross investment equals depreciation?
If net investment is negative this means that depreciation is greater than gross investment, or more capital wears out than is produced so we would have a "declining economy". If gross investment (all new capital that is produced) EQUALS depreciation (capital that wears out) then net investment will equal zero.
How does the flow of investment and depreciation change the stock of capital?
Changes in the capital stock depend on the difference between business investment expenditures and capital depreciation. If investment in new capital exceeds the depreciation of existing capital, then the capital stock expands. If depreciation exceeds investment, then the capital stock contracts.
When gross investment is less than depreciation net investment is?
If gross investment is less than depreciation in any period, then net investment is negative and the capital stock declines. In the official estimates of total output, gross investment (GPDI) minus depreciation equals net private domestic investment (NPDI).
What is the relationship between net investment and the capital stock?
The difference between savings and depreciation is net investment, the addition to the capital stock in the next period. As long as net investment is positive, the capital stock will grow in the next period, and thus output will be higher.
Does capital stock grow when investment is greater than depreciation?
Whether the capital stock expands, contracts or stays the same depends on whether investment is greater than, equal to or less than depreciation. then the stock of capital will stay constant.
When gross investment is greater than depreciation then the nation's capital stock increased?
14.1 The Role and Nature of Investment Investment adds to the capital stock, and depreciation reduces it. Gross investment minus depreciation is net investment. If gross investment is greater than depreciation in any period, then net investment is positive and the capital stock increases.
When gross investment and depreciation are equal the value of net investment is zero quizlet?
When Gross Investment and depreciation are equal, Net Investment is zero and there is no change in capital stock size. This is defined as spending by private businesses and not by government agencies. Investment is taking place inside the country.
Does investment increase capital stock?
Investment adds to the capital stock, and depreciation reduces it. Gross investment minus depreciation is net investment. If gross investment is greater than depreciation in any period, then net investment is positive and the capital stock increases.
What is the difference between gross investment and net investment can gross investment be positive when net investment is negative?
Net investment is gross investment minus the depreciation on existing capital. Thus net investment is the overall increase in the capital stock. Yes, it is possible for gross investment to be positive when net investment is negative.
What is the relationship between gross investment net investment and depreciation?
Net investment is the gross investment minus the depreciation on the existing capital. The gross investment is the total amount spent on goods to produce goods and services.
What is investment gross investment and net investment?
In other words, gross investment is the amount that a company has invested in particular assets or the business as a whole without considering depreciation for the same. Net Investment, on other hand, is the actual addition that is made to capital stock in a given period.