Business Investment Flashcards

1
Q

What is investment

A

Spending on capital goods

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2
Q

What are capital goods

A

Goods that can produce other goods

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3
Q

What is gross investment

A

Total Investment on new capital inputs

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4
Q

What is net investment

A

Gross Investment adjustment for capital consumption (depreciation)

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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

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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)

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7
Q

Why is infrastructure investment important

A

It is vital for sustainable growth

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