Which of the following statements regarding investment is correct?

Question

Quizplus · Accepted Answer

Housing construction is considered an investment because it increases the existing stock of capital goods (in this case, housing). This is in contrast to consumption expenditure, which refers to purchases of goods and services for immediate use or satisfaction.

B) rental payments are not included as investment expenditures because they do not result in the acquisition of a new capital good, but rather the use of an existing one.

C) Depreciation refers to the decrease in value of existing capital stock over time, not funds used to increase it.

D) stocks and bonds are financial assets, not physical capital goods, and so are not included in the capital stock.

E) the accumulation of inventories is considered investment spending because it represents the purchase of goods that will be used or sold in the future, and thus adds to the stock of capital.

Which of the Following Statements Regarding Investment Is Correct