Note on Investments
What is it?
It is spending done by businesses.
Businesses spend money
on plant, buildings, equipment, machinery and tools – all of which are used in the
production of a good or service.
Investment is represented by the capital letter, “I”.
All acquisitions of buildings, equipment, machinery, tools,
etc. by businesses.
Construction of factories, office buildings, shopping centers,
residential structures (apartment buildings, single family homes, etc.)
Change in inventories
All businesses maintain a
certain amount of
inventory, in the event that demand for the good increases, and sales rises.
Subcomponents of inventories include:
(i.e., for an auto manufacturer, raw materials would
include steel, wires, plastic, glass, fabric)
b. Intermediate goods
(parts, components used in the assembly of a
finished good, such as computer chips, tires, engine blocks, car seats,
(final goods produced and sold in product markets to
households and consumers.
an automobile or a carton of