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

Answer 1

This statement is incorrect.

Step-by-step explanation:

Because negative net investment does not mean the economy produced no new capital goods in that year.

Negative net investment: reduction in capital assets due to the non-replacement of such redundant and out - of-date capital products. Nevertheless, the substitution of such goods generally requires additional capital goods. Net expenditure refers to the net amount of the sale of capital goods produced.