Investment spending refers to the:
A)accumulation of financial stock by an individual firm.
B)addition to the economy's supply of productive physical capital.
C)total net value of assets sold to foreigners.
D)total spending by households.

Question

Quizplus · Accepted Answer

Investment spending refers to the addition to the economy's supply of productive physical capital, such as factories, equipment, and buildings. It is a measure of the money spent by firms to increase their future output and productivity. The accumulation of financial stock by an individual firm (A) is not necessarily an investment in physical capital, and the total net value of assets sold to foreigners (C) does not necessarily reflect investment spending within the domestic economy. Total spending by households (D) refers to consumption spending, not investment spending.

Investment Spending Refers to The