Government Investment

An economist is calculating a country's national accounts for the past year and has gathered the following data on various expenditures (all figures in millions of dollars):

1. A technology firm purchased new servers for its data center: $30
2. The national government constructed a new highway: $100
3. A family purchased a newly built condominium: $1
4. A car manufacturer's inventory of unsold cars increased in value: $15
5. A household purchased a 50-year-old house from its previous owner: $2

Match each economic transaction with the statement that best describes its classification within the national accounts.

Analyzing Economic Policies and Fixed Investment

A country's gross fixed capital formation for a given year includes the value of a new factory built by a corporation and the increase in that corporation's stock of unsold goods.

Identifying Components of Gross Fixed Capital Formation

Evaluating Components of National Investment

Differentiating Transactions in National Accounts

A manufacturing company spends $5 million on a new production facility and machinery. In the context of national income accounting, this entire expenditure is categorized as ____.

An economist observes two real estate transactions in a given year:

1. A household purchases a brand-new home from a construction company for $400,000.
2. A different household purchases a 50-year-old home from its previous owner for $350,000.

When measuring the total value of newly created capital goods for the year, how should these transactions be categorized?

Comparison of Fixed Investment's Share in GDP: China vs. Other Nations

Business Fixed Investment

Residential Investment