What do you mean by investment or capital formation? Name its various

1.	What do you mean by investment or capital formation? Name its various concepts.
Answer» Investment or Capital Formation- The addition in the capital stock of a country is called investment or capital formation. E.g. - Construction of building, purchase of machinery, addition to the inventories of goods etc. Investment can be of two types- 1- Gross Investment: The total addition made to the capital stock of economy in a given period is termed as gross investment. It consists fixed assets and unsold stock. 2-Net Investment: The actual addition made to the capital stock of economy in a given period of time is called net investment. It can be obtained by subtracting depreciation or consumption of fixed capital from gross investment. Net Investment = Gross Investment – Depreciation

What do you mean by investment or capital formation? Name its various concepts.

Answer»

Investment or Capital Formation- The addition in the capital stock of a country is called investment or capital formation. E.g. - Construction of building, purchase of machinery, addition to the inventories of goods etc.

Investment can be of two types-

1- Gross Investment: The total addition made to the capital stock of economy in a given period is termed as gross investment. It consists fixed assets and unsold stock.

2-Net Investment: The actual addition made to the capital stock of economy in a given period of time is called net investment. It can be obtained by subtracting depreciation or consumption of fixed capital from gross investment.

Net Investment = Gross Investment – Depreciation

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