What do you meant by investment, Macroeconomics

Assignment Help:

Q. What do you meant by Investment?

When we use the word investment, we characteristically mean 'gross investment'. Fundamentally, gross investment comprises all finished goods which we have produced though not consumed. The significant parts of gross investment are gross fixed investment and changes in inventories.

Gross fixed investment is total amount of investment in fixed capital. If a firm produces more than it sells in a certain period of time, its inventory will increase. This would be counted as a positive investment. Similarly we will have a negative inventory investment whenever inventories decrease. 

By net investments we mean gross investments minus depreciation such that actual increase in amount of capital between two periods in time is equal to net investment during this period. Keep in mind that whereas capital is a stock, investment is a flow. We may talk about a firm's total amount of capital at a certain point in time and a firm's total investment over a period of time.

2057_What do you meant by Investment.png

Figure


Related Discussions:- What do you meant by investment

Wall street journal article, 1. An innovator, who creates new products and ...

1. An innovator, who creates new products and new ways to get business done, is referred to as: Select one: a. A manager. b. A capitalist. c. An entrepreneur. d. A creditor. 2

Name two strategies is most likely to lead to development, Explain which of...

Explain which of the two strategies is most likely to lead to development. Empirically, it seems rather evident that export-orientation has been more successful than import-sub

Demand for money - theories, The amount of wealth that households and busin...

The amount of wealth that households and business desire to hold in the form of money balances is called the 'demand for money'. Individuals and firms have at their command only

Is household savings depend on gdp in the cross model, Q. Is Household savi...

Q. Is Household savings depend on GDP in the cross model? Household savings depends on Y since S H = Y - C - NT and C and NT both rely on Y. How it depends on Y can't be concl

Protectionism and free trade, why is international trade important for sout...

why is international trade important for south Africa

Describe supply and demand in macroeconomics, Q. Describe Supply and demand...

Q. Describe Supply and demand in macroeconomics? In microeconomics, we are careful to distinguish between demand, supply and observed quantity. The first two are hypothetical c

Illustrate neo-classical growth model, Q. Illustrate neo-classical growth m...

Q. Illustrate neo-classical growth model? The main purpose of another significant growth model, neo-classical growth model, is to explain how it is possible to have a permanent

Review of related economic theory, Oil price shocks lead to large adverse s...

Oil price shocks lead to large adverse supply shocks in the macroeconomy, infer Dornbusch et al (2008) who define an adverse supply shock as; ‘one that shifts the aggregate supply

What is this volume in acre-feet, 1. Lake Kickapoo, TX, is approximately 12...

1. Lake Kickapoo, TX, is approximately 12 km in length by 2.5 km in width. The inflow for the month of April is 3.26 m3/s and the outflow is 2.93 m3/s. The total monthly precipitat

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd