What is net investment?

Question

Accepted Answer

1. Definition: Net investment measures the change in the capital stock after replacing worn-out or depreciated capital.

2. Formula: If $G$ is gross investment and $D$ is depreciation, then

$\quad$ Net investment $= G - D$.

3. Check options:

- (1) "Sum of all the investments in a country" is vague and not the standard definition of net investment.
   - (2) "Gross investment + depreciation" would add depreciation, which is wrong; that gives a value larger than gross investment.
   - (3) "Gross capital investment - indirect taxes" is unrelated to depreciation; indirect taxes are not subtracted to obtain net investment.
   - (4) "Gross investment - depreciation" matches the standard formula $	ext{Net} = G - D$.

Therefore the correct choice is option (4), i.e. d.

FINAL_ANSWER: <d>

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