- spenidng on capital oods by firms and gov, which allow increased production of consumer foods and services in future time period
GROSS AND NET INVESTMENT
- Net investment: positive when gross investment is higher than depreciation or capital consumtion- increase in nation's stock of capital
- fixed investment:spending on new capital machinery& plant, construction,housing , vehicles etc.
- working capital:spending on stocks of finished goods & raw materials-accumulation of stocks wheter in/voluntary= investment
- Gross domestic fixed capital formation: expenditure on fixed assets
WHY DO FIRMS INVEST?
- it implies a rise in the firm's capital stock & long run expansion in the size of a business
- to take advantage of higher expected…