Note%20on%20Investments - Note on Investments Investment...

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Note on Investments Investment 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”. Components of Investment include: 1. Capital stock : All acquisitions of buildings, equipment, machinery, tools, etc. by businesses. 2. Construction : Construction of factories, office buildings, shopping centers, residential structures (apartment buildings, single family homes, etc.) 3. 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: a. Raw materials (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, etc.) c. Finished goods (final goods produced and sold in product markets to households and consumers. Examples: an automobile or a carton of milk). Gross Investment
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Note%20on%20Investments - Note on Investments Investment...

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