Page 46 - Macroeconomics. book docx_Neat

4.5 Investment Spending (I)

Investment spending plays a key role in economic growth and development.

4.5.1 Meaning of Investment

Investment refers to spending on capital goods used to produce other goods and

services in the future.

Examples include machines, factories, tools, equipment, and technology.

Investment in economics does not mean buying shares, bonds, or gold.

4.5.2 Types of Investment Spending

Fixed investment: Spending on long-term assets such as buildings, machinery, and

factories.

Inventory investment: Changes in inventories held by firms, such as raw materials and

finished goods.

4.5.3 Gross Investment and Net Investment

Gross investment refers to total spending on capital goods during a period of time,
without deducting depreciation.

46