Gross private domestic investment does not include what? 1. Spending to build up

Question

Gross private domestic investment does not include what? 1. Spending to build up inventory. 2. Spending for office supplies. 3. Spending for a new house. 4. Unintentional inventory investment. 5. Spending on employees salaries. Gross private domestic investment does not include what? 1. Spending to build up inventory. 2. Spending for office supplies. 3. Spending for a new house. 4. Unintentional inventory investment. 5. Spending on employees salaries. 1. Spending to build up inventory. 2. Spending for office supplies. 3. Spending for a new house. 4. Unintentional inventory investment. 5. Spending on employees salaries.

Explanation / Answer

Investment is the addition to capital stock and it is one of major component of national income accounting. Investment determines the standard of living and plays a key role in achieving long run growth of the country. There are three kinds of investment: business fixed investment, residential investment and inventory investment. The business fixed investment refers to the investment of the firms on equipment and structures to produce goods and services. The residential investment is investment in buildings and factories, inventory investment is investment in goods that can be sold latter to smooth out any shock.

Therefore, the spending in employees salaries is not an invetsment rather reprenets cost to the firm.

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