Final answer:
Gross investment refers to the overall increase in the capital stock, while net investment is the overall increase in the capital stock minus depreciation. Gross investment can be positive when net investment is negative.
Step-by-step explanation:
Gross investment refers to the overall increase in the capital stock, while net investment is the overall increase in the capital stock minus depreciation. In other words, gross investment includes both investment in new capital goods and replacement of worn-out capital goods. Net investment measures the change in the total capital stock by subtracting the amount of capital consumed or depreciated.
Yes, it is possible for gross investment to be positive even when net investment is negative. This can occur when the amount of capital goods being replaced or depreciated exceeds the amount of new capital goods being acquired. In such cases, the overall capital stock may decrease, leading to a negative net investment.