Suppose a firm purchases new equipment to replace worn-out equipment at its factory. This purchase of new equipment is considered
A) durable consumption goods.
B) inventory investment.
C) gross private domestic investment.
D) none of the above.

Question

Quizplus · Accepted Answer

The purchase of new equipment to replace worn-out equipment at a factory is considered gross private domestic investment, a component of GDP that includes all purchases of capital goods, such as machinery, equipment, and buildings, that are used to produce other goods and services. This investment adds to the country's stock of productive capital and is an important determinant of long-term economic growth.

Suppose a Firm Purchases New Equipment to Replace Worn-Out Equipment