Chapter 25: Investment

1. Define 'investment' in terms of economics and explain it 

The addition to the capital stock of the economy. Investment only takes place if real products are created such as buying new machinery to set up a company 

1. What is the difference between gross investment and net investment? 

Gross investment measures investment before depreciation whilst net investment is gross investment without the value of depreciation. 

1. Define 'depreciation' / 'capital consumption' 

It is the value of capital stock which has been used up or worn out 

1. If interest rates on loans are high, how would it affect the profit made from investment by firms? 

The profit made would be low which…