When a firm buys a new machine for its business, it is considered to be:
A)consumption.
B)investment spending.
C)government spending.
D)private saving.

Question

Quizplus · Accepted Answer

Investment spending refers to the purchase of physical capital, such as equipment or machinery, which is done by a firm to increase its production or improve its operations. Therefore, when a firm buys a new machine, it is considered investment spending. The other options are not applicable here. Consumption refers to the purchase of goods and services by individuals or households for their own satisfaction. Government spending refers to the purchases made by the government to provide public goods and services. Private saving refers to the portion of income that individuals or households save for future use.

When a Firm Buys a New Machine for Its Business