When we use the term fixed investment, we include in investment
A) the purchase of stocks and bonds.
B) the purchase of consumer goods.
C) the purchase of private bonds, but not government bonds.
D) the purchase of equipment and other capital goods.

Question

Quizplus · Accepted Answer

Fixed investment refers to the purchase of long-term capital goods, such as equipment and machinery, that are used for production. It does not include the purchase of stocks and bonds (which are financial assets, not physical capital goods) or consumer goods (which are purchased for consumption, not production). Private and government bonds may or may not be considered fixed investment depending on how they are being used (e.g. if they are being used to purchase capital goods, they would be considered investment).

When We Use the Term Fixed Investment, We Include in Investment