SSC CGL 2024 Tier-I · 12 September 2024, Shift 1 · General Awareness · Question 6 of 99

Text as printed on a candidate's response sheet for this shift; answer per SSC's tentative key as marked on that sheet. Solution last reviewed 6 September 2026.

Where this paper and its answers come from

SSC does not publish CGL question papers or a public answer key. The questions and options here are reproduced as printed on a candidate's own response sheet for this shift — the Commission's text, unchanged. Each answer is SSC's tentative key as marked on that sheet; SSC allowed challenges to it and never publishes a final key. The solutions are written by UnlockIAS.

What is net investment?

(a)Gross investment + depreciation
(b)Gross investment - depreciation
(c)Gross capital investment - indirect taxes
(d)Sum of all the investments in a country

Answer

Why

Correct — B. Gross investment is all spending on capital goods in a year. Part of that spending only replaces capital worn out or made obsolete during the same year, and that part is depreciation — the consumption of fixed capital.

Strip the replacement out and what remains is the genuine addition to the capital stock:
Net investment = Gross investment − depreciation

That is the relation the key states → option (b).

Why the others are wrong

(a)
Gross investment + depreciation — This adds depreciation instead of removing it. Gross investment already contains the replacement spending, so adding it back counts replacement twice and produces no meaningful aggregate.
(c)
Gross capital investment - indirect taxes — Subtracting indirect taxes is the market-price to factor-cost adjustment — a different correction entirely. It changes how an aggregate is valued, not whether it is gross or net.
(d)
Sum of all the investments in a country — The sum of all investment in a country is the definition of gross investment, or gross capital formation. It is the figure depreciation still has to come out of, not the answer to a net question.

Concept

National income accounting makes three separate adjustments, and this question tests whether you can keep them apart.

Gross to net removes depreciation: net investment = gross investment − depreciation, NDP = GDP − depreciation, NNP = GNP − depreciation.

Market price to factor cost removes net indirect taxes, which are indirect taxes minus subsidies.

Domestic to national adds net factor income from abroad. Each answers a different question, and the wrong options here are built out of the other two.

Net investment can be negative. If depreciation in a year exceeds gross investment, the capital stock has actually shrunk — an economy wearing out its machinery faster than it replaces it.

Key facts

Net investment equals gross investment minus depreciation.
Depreciation is the consumption of fixed capital — normal wear, tear and expected obsolescence.
NDP = GDP − depreciation, and NNP = GNP − depreciation.
Net indirect taxes are indirect taxes minus subsidies, and removing them converts a market-price aggregate to factor cost.

Study next

GDP, GNP, NDP and NNP at market price and at factor costNet factor income from abroad and the domestic-versus-national distinctionGross and net fixed capital formation in the national accounts

Common traps

Subtracting net indirect taxes when the question asks for a gross-to-net conversion.
Forgetting that depreciation is always subtracted, never added, on the way from gross to net.

SSC asks this one subtraction under different labels. What is subtracted from GDP to arrive at NDP is asked at 17 Sep 2024, 12:30, GA Q.21, and the same relation as a formula, NDP = GDP − depreciation, at 25 Sep 2024, 09:00, GA Q.21.

The aggregate in the stem changes; the operation does not.

Related PYQs

No directly related past PYQ was found.