EconGuru Economics Guide RSS Syndication

EconGuru Economics Guide » Investment

© Copyright 2006 - 2011 EconGuru.com. All rights reserved. Assets marked and linked to the original sources are hereby used for educational purposes only and are copyrighted by their respective owners.

Subscribe to EconGuru.

Investment

Bridge building as investment to the economy

Bridge building as investment to the economy
Courtesy of qofd

Investment refers to the act of buying capital goods that are expected to generate income or appreciate in future. It's related to saving or deferring consumption.

In terms of macroeconomics, investment is the production per unit time of goods which are not consumed but are to be used for future production.

Gross investment minus capital depreciation is net investment.

Gross private domestic investment, is comprised of spending on new capital goods and additions to invesntories. Residential construction bought by individuals or households for home may appear to be consumption, but it's actually included in the gross private domestic investment.

In terms of finance, however, investment bears a slightly different meaning from that of macroeconomics. For example, if you withdraw $1,000 dollars from your bank account to buy securities, there's no economic investment but just your personal financial investment because no capital goods are placed for production.

<?php bloginfo('name'); ?>

Educating the public since 2006.