con 199 P.S. #6 Would each of the following count as \"Investment\" when it come
ID: 1106610 • Letter: C
Question
con 199 P.S. #6 Would each of the following count as "Investment" when it comes to calculating aggregate demand? Why or why not? 5. a) Channel 5 buys a new HD television camera to tape news segments. b) State Street bank purchases 1 million shares of EMC stock. c) Microsoft buys Yahoo! for $30 billion. d) The Red Sox expand seating at Fenway Park by building bleacher seats on e) EMC purchases an old warehouse in Worcester to build a data storage f) EMC purchases new servers to put in the data storage facility from part d g) Bill Belichick buys a 2 bedroom, 25 year old home in Foxboro, MA. the other side of Landsdowne Street. facility. above. h) Tom Brady and Gizele Bundchen purchase a $10 million, newly constructed mansion in Chestnut Hill. Gillette produces 1 million razors in December that will not be shipped to stores until January i)Explanation / Answer
Q5 a) It will be considered as an investment as a camera to tape news for a news channel is same as a computer for an IT firm. It will be considered a capital good.
b) It will be considered as an investment because buying of shares by a financial company is investing its resources ,from where the company will get returns as well.
c) It is an investment because a company take over is done for the purpose of profit maximisation generally.
d) It will be considered as an investment because the seats will provide them returns in the future i.e. the ticket price.
e) and f) EMC purchasing a warehouse and servers for facilitating their business operations will be considered as an investment.
g) and h) It is not an investment. Purchase of a house or a mansion is considered as consumption and not investment.
i) It is an investment. If it would have been some unintended inventory or unsold stock from previous period, it would not have come under AD.
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