ECON 100B Section 2

Business nonresidential fixed investment capital

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Unformatted text preview: (or Income- Expenditure Identity) = Y = C + I + G + NX Consumption 1. Durable goods – expected to last 3 years or longer 2. Nondurable goods – generally last less than 3 years a. Food b. Clothing c. Gasoline d. Magazines 3. Services a. Rent b. BART Ride c. Lectures 4. US has very large consumption relative to the rest of the other categories Investment Spending – New capital goods (fixed investment) plus inventory investment 1. Business (nonresidential) fixed investment – capital goods, offices, ships, etc 2. Residential fixed investment – housing component 3. Inventory investment 4. Very volatile and has to do with how business cycles unfold Government Spending 1. Government Purchases a. Federal Government Purchases (don’t count as investment, although they do do investment activit...
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