Which of the following is included in the investment component of GDP?
A) purchases of previously owned homes
B) purchases of government bonds
C) purchases of new cars
D) purchases of new houses

Question

Quizplus · Accepted Answer

The investment component of GDP includes purchases of new houses, as it is considered investment in fixed assets. Purchases of previously owned homes (A) are not included because it is not considered investment, but rather a transfer of assets. Similarly, purchases of government bonds (B) are not included because they are considered financial investments, not investments in fixed assets. Purchases of new cars (C) are also not included in the investment component of GDP, but rather in the consumption component.

Which of the Following Is Included in the Investment Component