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What is the difference between financial investment and economic investment?

A. There is no difference between the two.

B. Financial investment refers to the purchase of financial assets only; economic investment refers to the purchase of any new or used capital goods.

C. Economic investment is adjusted for inflation; financial investment is not.

D. Financial investment refers to the purchase of assets for financial gain; economic investment refers to the purchase of newly created capital goods.

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Sonal Bahl
Sonal BahlLv10
20 Jan 2021

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Related questions

For the purpose of calculating GDP, investment is spending on

A. stocks, bonds, and other financial assets.

B. real estate and financial assets such as stocks and bonds.

C higher education.

D. capital equipment, inventories, and structures by businesses, plus household purchases of new housing.

Use the concepts of gross investment and net investment to distinguish between an economy that has a rising stock of capital and one that has a falling stock of capital. In 1933 net private domestic investment was minus $6 billion. This means that in that particular year the economy produced no capital goods at all.

This statement is

a.)incorrect because negative net investment does not mean the economy produced no new capital goods in that year.

b.)correct because gross investment exceeded depreciation.

c.)incorrect because gross investment exceeded depreciation.

d.)correct because negative net investment means the economy produced no new capital goods in that year.

1. Which of the following is not an economic investment?

A. The purchase of a drill press by the Ajax Manufacturing Company.

B. The purchase of 100 shares of AT&T by a retired business executive.

C. construction of a suburban housing project.

D. The piling up of inventories on a grocer's shelf.

 

2. If the economy adds to its inventory of goods during some year:

A. Gross investment will exceed net investment by the amount of the inventory increase.

B. This amount should be ignored in calculating that year's GDP.

C. This amount should be subtracted in calculating that year's GDP.

D. This amount should be included in calculating that year's GDP.

 

3. Transfer payments are:

A. excluded when calculating GDP because they only reflect inflation.

B. excluded when calculating GDP because they do not reflect current production.

C. included when calculating GDP because they are a category of investment spending.

D. included when calculating GDP because they increase the spending of recipients.

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