Question

What does investment expenditure mainly refer to in macroeconomics?

Options

• Spending by households on consumer goods and services

• Spending on financial assets like shares and bonds

• Spending on capital goods like machinery, buildings, and inventories that increase productive capacity

• Spending on imported goods and raw materials

Answer 1

Spending on capital goods like machinery, buildings, and inventories that increase productive capacity

Explanation: 

Investment means spending on capital goods that raise the economy’s productive capacity and capital stock.