Answer
Investment from economists’ point of view refer to the production of new goods and services through the creation and expansion of business enterprises. Also, spending on production and accumulation of capital goods are considered economic investment. Financial investments are the purchase of stocks, bonds and real estate in the hope of reaping a financial gain. Swapping cash for a stock or bond is not considered economic investment because these transactions simply transfer the ownership of financial assets or existing real assets from one person to another. The economic investment made today will be low as well because firms don’t expect for high returns on their investment. The firms will make more economic investment now if they expect future returns to b high.
Work Step by Step
Investment from economists’ point of view refer to the production of new goods and services through the creation and expansion of business enterprises. Also, spending on production and accumulation of capital goods are considered economic investment. Financial investments are the purchase of stocks, bonds and real estate in the hope of reaping a financial gain. Swapping cash for a stock or bond is not considered economic investment because these transactions simply transfer the ownership of financial assets or existing real assets from one person to another. The economic investment made today will be low as well because firms don’t expect for high returns on their investment. The firms will make more economic investment now if they expect future returns to b high.
