Principles of Macroeconomics / Unit 15 MAC 1405 short lesson, about 20 seconds
Gross and Net Investment
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The idea
Gross private investment runs at roughly a sixth of output, but about half merely replaces capital that has worn out. The net addition to the capital stock is a much smaller share.
In practice
So a deficit of a few percent of output is large against net new investment.
Where people slip
Comparing a deficit with gross investment makes crowding out look smaller.
Your place on the trail
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