Homework Answers
In economics, investment implies expenditure on productive assets
rather than on monetary assets.
This expenditure includes the expenditure on capital goods such as machinery, plant and equipment that are used for further production of final goods and services.
Also, any change in inventories are also taken as part of investment.
Intermediate goods get transformed into final goods during production process and thus expenditure on them is not part of investment.
Hence, the correct answer is option (3) [Investment includes the purchase of intermediate goods used by firms in the production process].
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answer all
QUESTION 19 Which statement about US private domestic investment is INCORRECT? It includes the purchase of machinery by foreign businesses. It does not include investments by the government. It includes the production of new software. It includes new residential construction. Refer to the below graph. At a price level of 116 116 110 105 1,0002,000 3,100 Real GDP (billions of dollars per year) inventories would fall. firms will have to raise their prices. aggregate quantity demanded will exceed...
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14. Which of the following statements is false? A. Capital consists of produced goods that can be used as inputs for further production. B. The terms resources, inputs, and factors of production are synonyms. C. Labor consists of the physical, but not mental, talents of people who contribute to th production process. D. Entrepreneurship is one of the four categories of resources. E. The resource category land includes natural resources, such as minerals, forests, wat unimproved land.
14. Investment (gross private domestic investment) does not include a. The sale of stocks and bonds b. The purchase of business capital goods (machinery) c. New factories and homes being built d. Changes in business inventories 15. Which of the following would be classified as a stock variable a. Mi b. GDP c. National income d. Depreciation (capital consumption allowance)
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