Business Investment Flashcards
1
Q
What is investment
A
Spending on capital goods
2
Q
What are capital goods
A
Goods that can produce other goods
3
Q
What is gross investment
A
Total Investment on new capital inputs
4
Q
What is net investment
A
Gross Investment adjustment for capital consumption (depreciation)
5
Q
What happens when gross investment is higher than capital consumption
A
Net investment will be positive
Size of an economys capital stock will grow
6
Q
What factors affect business investment
A
Actual + Expected level of demand
Expected profits and business taxes
Interest Rates + availability of loans
Business Confidence (Animal Spirits)
7
Q
Why is infrastructure investment important
A
It is vital for sustainable growth
