Topic Videos
Gross and Net Investment
- Level:
- AS, A-Level, IB
- Board:
- AQA, Edexcel, OCR, IB, Eduqas, WJEC
Last updated 27 Oct 2020
The difference between gross investment and net investment is explained in this short revision video.
Gross Investment
Gross investment is the total amount that the economy spends on new capital. This figure includes an estimate for the value of capital depreciation since some investment is needed each year just to replace technologically obsolete or worn-out plant and machinery.
Net Investment
Net investment = gross investment – capital depreciation.
If gross investment is higher than depreciation, then net investment will be positive. This means that businesses will have a higher productive capacity and can meet rising demand in the future.
You might also like
Growth and Development in Ethiopia
17th October 2014
Slowing German economy must raise investment
19th October 2014
Do interest rates affect business investment?
17th October 2014
Relevance of Keynesian Economics
17th October 2014
The Cross Rail Project
22nd September 2014
Chinese FDI in Africa
15th May 2014
Aggregate Demand and Aggregate Supply Lesson Resource
22nd January 2016
Aggregate Demand Glossary
5th May 2012