Gross fixed investment can never be negative, but net fixed investment can, because

gross investment includes only government spendingCorrect answerYour answernet investment includes buying sharesCorrect answerYour answerdepreciation is always zeroCorrect answerYour answernet investment subtracts depreciation, which may exceed new spending on capitalCorrect answerYour answer

Show the answer and explanation

CorrectNot quiteAnswer D

Correct answer: D

New spending on fixed capital cannot be below zero.
If machines wear out faster than new ones are bought, gross − depreciation is negative.

Worth noting

This is about fixed capital. Inventory investment on its own can be negative when stocks are run down.

Concept: Gross versus net investment
Typical timeTypical: 70 s
Your timeYours: —

The rule this testsInvestment and depreciation

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Ten questions from Basic Concepts & the Circular Flow, at your own pace.

Gross fixed investment can never be negative, but net fixed investment can, because

Explanation