Investment to Cover Capital Wear and Tear
The question asks for the specific value of gross investment that is required solely to account for the regular wear and tear of capital assets.
Understanding Key Economic Terms
- Gross Investment: This refers to the total amount spent on new capital goods and replacing depreciated capital.
- Depreciation: This is the decrease in the value of an asset over time due to usage, wear and tear, or obsolescence. It represents the cost of the capital consumed during production.
- Net Investment: This is gross investment minus depreciation. It represents the actual increase in the capital stock.
Identifying the Correct Term
The portion of gross investment that specifically covers the regular wear and tear of existing capital is precisely the amount needed to replace that consumed capital. This replacement cost is measured by depreciation.
Therefore, the value of gross investment needed to accommodate regular wear and tear is directly represented by depreciation.
Similar Questions
- In India, National Income is computed by:
- Which of the following sectors contribute the most to GDP in India?
- Deduction of depreciation from Gross National Product is known as:
- As per estimates by NSO, India's GDP is estimated to grow by ______ in FY21.
- We should consider the value of final goods only while estimating GDP because:
- Equilibrium national income occurs where aggregate supply ________
- Which of the following is the correct full form of GDFCF?
- Gross Domestic Production is the total value of:
Which of the following economic models formed the basis of the Second Five-Year Plan?
Important Questions from National Income Accounting
Division of labour often involves
1. specialized economic activity.
2. highly distinct productive roles.
3. involving everyone in many of the same activities.
4. individuals engage in only a single activity and are dependent on others to meet their various needs.
Select the correct answer using the code given below:
Which of the following is NOT one of the methods of national income estimation?
Cash Reserve Ratio (CRR) is calculated as a percentage of each bank's _____.
What do you call a proportionate saving in costs gained by an increased level of production?
Which of the following statements is/are correct?
I. Only marketed goods and considered while estimating Gross Domestic Product (GDP).
II. The work done by a woman at her home is outside the purview of Gross Domestic Product.
III. In estimating GDP, only final goods and services are considered.
