When economists use the term "investment" or "investment spending,"
They are
A) talking about activities such as buying a stock or a bond.
B) talking about transactions that add to the capital stock and increase potential output.
C) talking about activities such as buying a certificate of deposit or commodity futures.
D) talking about transactions that result in interest being paid to the buyer.

Question

Quizplus · Accepted Answer

In economics, "investment" or "investment spending" refers to expenditures on new physical capital, such as buildings, machinery, and equipment, which add to the capital stock of an economy and increase its potential output. This is distinct from financial investments like stocks, bonds, or commodity futures, which are more about asset allocation and earning returns.

When Economists Use the Term "Investment" or "Investment Spending