a) Gross and net investment

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Last updated 9:41 PM on 4/14/26
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5 Terms

1
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  • state how investment improves the economy

  • more capital goods produced/purchased

  • more consumer goods produced

  • higher RGDP + higher productive efficiency

2
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  • define depreciation

  • the decrease in monetary value of a capital good over time

3
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  • define gross investment

  • investment including

  • → replacement of old capital goods + addition of new capital goods

4
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  • define net investment

  • investment including

  • → only addition of new capital goods

5
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  • describe why net investment represents economic growth more accurately

  • replacing old capital goods

  • → produces the same amount of consumer goods produced

  • → does not increase RGDP + productive efficiency