Gross Investment ,Net Investment and Depreciation

A very good morning boys
Today's topic is slightly easier than the earlier ones.
You will have to watch the video and listen very carefully to the explanation because the concept of depreciation is important as you will need it in the calculation of National I.ncome'
I will be giving an explanation below the video in a written format.

Learning Outcomes

• To understand why and how depreciation happens.
• To understand what is investment.
• Components of investments
• How to use depreciation in National Income accounting.

Before we begin with our class i would like you to check your answers for yesterday.

Ans to the above image are:

1. b
2. d

Ans of the above image are as follows:

3. c
4. d
5. b
6. b
7. c
8. a

There are certain things that i would like to bring to your attention.

Please keep these important points in mind.

• Depreciation is also known as

1. Current replacement cost
2. Replacement cost of Fixed capital
3. Consumption of fixed capital

• Capital loss which is loss in the value of fixed asset due to unexpected obsolescence i.e natural calamities, thefts, accidents etc are not part of depreciation.
• Gross investment =Net investment +Depreciation
• Net investment =    Gross investment - Depreciation

Your assignment for today 

MCQ'S