ECON 102 Lecture Notes - Lecture 2: Net Domestic Product, Investment Goods, Durable Good
Document Summary
Investment consists of these three components: structures, equipment, and software purchases by firms. Basically durable goods that firms use to carry out their business. Software was added to this component a number of years ago: residential construction: value of new housing built in the gdp time period (not the value of existing houses). Home improvement, like a room addition or substantial remodeling, also adds to this component: change in inventories. Note that "investment" for purposes of this course refers to these components, not the purchase of stocks, bonds, or other financial assets. It may seem like these investment goods purchased by a business should be intermediate goods because they are used to produce other goods and services. However, economists include them in gdp because they are durable. Durable goods are defined as goods that last for at least 3 years. A durable good will still be used for many years after they are produced.
