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Business fixed investment-Inventory Investment

Describe the following terms:

(i) Business fixed investment
(ii) Inventory Investment
(iii) Residential construction Investment
(iv) Public Investment.

Answer:

(i) Business Fixed Investment: This is the amount used up by the business units on the purchasing of newly formed plants and equipments.

(ii) Inventory Investment: This refers to the total change in inventories of final goods, semi finished goods, raw material and so on.

(iii) Residential Construction Investment: This is the amount spent on building of housing units.

(iv) Public Investment: This comprises all capital formation carried by the government like building of roads, hospitals, and schools.

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