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Gross private domestic investment

Classify the various categories of 'gross private domestic investment'.

Explain what is meant by each briefly. (The Prof. said, " I am not referring to 'net investment' and 'depreciation' when I say various categories.)

Solution Preview

Gross Private Domestic Investment refers to the total amount of investment spending by businesses and firms located within the borders of a nation, or defined as expenditures on capital goods to be used for productive activities in the domestic economy that are undertaken by the business sector during a given time period. It includes both the values of the purchases of non-residential fixed investment, which include capital goods used for production, and the values of the purchases of residential fixed investment, which include construction spending for factories or offices. Gross private domestic investment tends to be the least stable ...

Solution Summary

The solution does a superb job of explaining the several categories of gross private domestic investment. The solution talks about fixed investment and changes in business inventories. The response is very detailed and well explained and ideal for students who want to strengthen their understanding of private domestic investment. Overall, an excellent response to the question asked.

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