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What are the components of gross investment?

Posted on April 16, 2014 at 10:50 AM

In economics courses, investment generally refers to business expenditures on capital goods. There are three components to gross investment when calculating the gross domestic product:

1. Fixed investment on capital goods (tools, machinery)

2. Residential and nonresidential investment (houses, apartments, stores)

3. Adjustments to inventories (accounting for unsold goods produced in the current year)

Net Investment = Gross Investment - Depreciation (AKA Consumption of Fixed Capital)

AP Macroeconomics Unit 2 Measuring Economic Performance

Categories: AP Macroeconomics, Macro Unit 2 Measuring Economic Performance

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