Gross investment includes both types of investment spending, but net investment only measures new assets rather than the replacement of assets. This will reduce long-term costs, increase competitiveness, and raise profits. Secondly, investment may be undertaken to purchase new machinery, equipment, or buildings in order to increase productive capacity.This is referred to as capital consumption, and arises from the continuous depreciation of fixed capital assets. Firstly, investment may be required to replace worn out, or failing machinery, equipment, or buildings.Business investment comprises between 65% and 85% of total investment in the majority of G7 countries. Investment refers to an increase in capital assets, and typically includes investment by business, investment in property (‘dwellings’) and investment by governments in ‘social’ capital. Investment spending is an injection into the circular flow of income.
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