Question

In macroeconomics, which of the following best describes economic (real) investment?

Options

• Purchase of existing company shares on the stock market

• Addition to physical capital and changes in inventories

• Increase in savings kept in bank deposits

• Purchase of foreign currency for speculation

Answer 1

Addition to physical capital and changes in inventories

Explanation:

Economic investment means adding to the stock of machines, buildings, roads, etc., and also changes in inventories of finished goods, not buying financial assets.