ABS19A00048Y
JACOB OHIMEH
ECONS ASSIGNMENT
1. What happens to the economy when gross invest is less than depreciation
2. What happens to an economy when gross invest is greater than depreciation
3. The reasons why RGDP measures of welfare in accurate
ANSWER
1. When the gross invest is consistently lower than depreciation,

The net invest will be negative, indicating that productive capacity is decreasing. This
can be a potential problem down the road. the capital stock declines.

Larger companies will run into loss in the production process.

If net invest is negative this means that capital wears out than is produced so we have a
declining economy.
2. When the gross invest is greater than depreciation,

The net invest will be positive and the capital stock increases.

Larger companies will gain profit in the production process.
3. Despite several shot comings GDP is commonly used as indicator of social welfare. as a result ,
GDP fails to account for non-market transactions wealth distribution, the effect of externalities,
and the types of goods or services that are been produced within the economy.