How is investment defined as an economic concept?
A) Investment is primarily the market value of all shares of stock held by the public.
B) Investment is primarily the market value of all equipment, buildings, and inventories held by corporations, partnerships, and proprietorships.
C) Investment is primarily the sum of expenditures by businesses on new capital goods that will yield a future stream of income.
D) Investment is primarily the portion of your savings held in an interest-earning account.

Question

Quizplus · Accepted Answer

Investment is an economic concept that refers to the purchase of capital goods with the expectation of earning a return on that investment. These capital goods can include equipment, buildings, and inventories, but the key factor is that they are purchased with the intention of generating future income. Expenditures by businesses on new capital goods that will yield a future stream of income is the most accurate definition of investment among the given options. Option A refers to the market value of shares of stock held by the public, which is a measure of ownership in a company and not a direct investment by the company. Option B refers to assets held by corporations, partnerships, and proprietorships, but not all of these assets may be intended for generating future income. Option D refers to savings held in an interest-earning account, which may be a form of investment, but not the most representative definition of investment as an economic concept.

How Is Investment Defined as an Economic Concept