What does gross private domestic investment include?
A) Business purchases of capital goods, all new construction, and purchases of consumer durable goods.
B) Business purchases of capital goods, all new construction, and inventory investment.
C) Business purchases of capital goods, all new commercial construction, and inventory investment.
D) Business purchases of capital goods, all new residential construction, and inventory investment.
E) Business purchases of all types of durable goods, all new construction, and inventory investment.

Question

Quizplus · Accepted Answer

Gross private domestic investment includes business purchases of capital goods (such as machinery and equipment), all new construction (both residential and commercial), and inventory investment (the value of the goods that businesses hold in storage in order to meet future demand). Choice A is incorrect because it includes purchases of consumer durable goods, which are not included in gross private domestic investment. Choice C is incorrect because it limits the definition of new construction to commercial construction, excluding residential construction. Choice D is incorrect because it limits the definition of new construction to residential construction, excluding commercial construction. And choice E is incorrect because it includes purchases of all types of durable goods, which is too broad a category and includes consumer durables that are not part of gross private domestic investment.

What Does Gross Private Domestic Investment Include