If depreciation exceeds gross investment:

CA Foundation · Business Economics · MTP · April 2025
If depreciation exceeds gross investment:
(A) A. the economy's stock of capital may be either growing or shrinking.
(B) B. the economy's stock of capital is shrinking.
(C) C. the economy's stock of capital is growing.
(D) D. net investment is zero.

Suggested Answer and Working Notes:

Correct Answer: Option (B)

B. the economy's stock of capital is shrinking.

Topics: Determination of National Income

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