Question

Use the concepts of gross investment and net investment to distinguish between an economy that has a rising stock of capital and one that has a falling stock of capital. To answer this question, evaluate the following statement: "In 1933 net private domestic investment was minus $6 billion. This means that in that particular year the economy produced no capital goods at all." This statement is correct, because negative net investment means the economy produced no new capital goods in that year. incorrect, because gross investment must have exceeded depreciation. incorrect, because negative net investment does not mean the economy produced no new capital goods in that year. correct, because gross investment must have exceeded depreciation.

Answer 1

Answer & Explanation:

because negative net investment means the economy produced no new capital goods in that year.