Question

use the concepts of gross and net investment to distinguish between an economy that has a rising stock of capital and one that has a falling stock of capital. Explain: "Though net investment can be positive, negative, or zero, it is impossible for gross investment to be less than zero."

Answer 1

Gross investment can be zero but never negative because it is the investment in the capital stock.

Explanation:

Gross investment in a country is the amount that has been spent by the economy on the fixed assets of the economy in a given period of time. It is the addition done to the total capital stock of the country in a particular period of time.

So this shows that it can be zero meaning that no amount is spent on the addition of the capital stock in a particular period of time but it can never be negative.