Net Investment

Net investment is the difference between gross investment and depreciation. Gross investment is the total amount of money spent on new capital goods, such as machinery and equipment. Depreciation is the amount of money that is set aside each year to replace worn-out capital goods. Net investment is the amount of money that is actually spent on new capital goods after taking into account depreciation.

Net investment is an important indicator of economic growth. A high level of net investment indicates that businesses are investing in new capital goods, which can lead to increased productivity and economic growth. A low level of net investment indicates that businesses are not investing in new capital goods, which can lead to decreased productivity and economic growth.

Net investment can be calculated using the following formula:

Net investment = Gross investment - Depreciation

Where:

• Gross investment is the total amount of money spent on new capital goods
• Depreciation is the amount of money that is set aside each year to replace worn-out capital goods

Net investment is a key concept in macroeconomics. It is used to measure the level of investment in an economy and to assess the health of the economy.