Financial Investments and Economy
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Questions and Answers

What is the primary goal of investing in the financial sense?

  • To form new and productive capital in the form of new construction
  • To increase the economy's capital stock
  • To improve human capital
  • To allocate monetary resources to assets that are expected to yield some gain or positive return (correct)
  • What is included in the economist's definition of investment?

  • Only new construction and plant equipment
  • Only producers' durable equipment
  • Only goods and services used in production
  • Inventories and human capital (correct)
  • What is the difference between investment in the financial sense and the economic sense?

  • The financial sense is more risky than the economic sense
  • The economic sense is more focused on forming new capital
  • The financial sense is more focused on short-term gains
  • The financial sense is focused on monetary resources, while the economic sense is focused on capital stock (correct)
  • What type of investments are referred to as 'Financial Investments'

    <p>Allocations of monetary resources to assets expected to yield some gain</p> Signup and view all the answers

    What is the primary focus of investment in the economic sense?

    <p>Increasing the economy's capital stock</p> Signup and view all the answers

    Study Notes

    Investment in Financial Sense

    • Investment is the allocation of monetary resources to assets that are expected to yield some gain or positive return over a given period
    • Assets can range from safe investments to risky investments
    • Also referred to as ‘Financial Investments’

    Investment in Economic Sense

    • In economics, investment means the net additions to the economy’s capital stock
    • Capital stock consists of goods and services used in the production of other goods and services
    • Includes the formation of new and productive capital in the form of:
      • New construction
      • New producers’ durable equipment (e.g. plant and equipment)
    • Inventories and human capital are also included in the economist’s definition of investment

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    Description

    Learn about financial investments and how they differ from economic investments. Understand the concept of investments in finance and economics, including the types of assets and capital stock.

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