What is the term for investment made to expand the economy’s productive capacity?
Answer (1)
That is called net investment. It refers to the amount of new investment after accounting for depreciation, which is the value lost as machinery or equipment gets old. If a manufacturing company in Cavite buys 10 new machines to increase production but also retires 5 old ones, the net investment is the added capacity from those 5 new machines. When net investment is high, it means the economy is growing because businesses are building more than they are replacing.
