<p>Investment is the value of machinery, plants, and buildings (capital) that are bought by firms for production purposes.</p>

<p>Investment contributes to many macroeconomic situations to include:</p>

<p>A.  Contributes to current demand of capital goods, increasing domestic spending</p>

<p>B.  Modernizes production processes and improving cost effectiveness </p>

<p>C.  Allows for the production of new and improved products, increasing value added in production</p>

<p>D.  Increases production capacity</p>

<p>The Investment types (machinery, plants, buildings) are directly linked to current and future sales (sales of final goods) of the firm.</p>

<p>An intermediate good is defined as the goods and services (including energy, raw materials, semi-finished goods, and services that are purchased from all sources) that are used in the production process to produce other goods or services rather than for final consumption.</p>

CC BY-SA 4.0
2020-03-26T02:52:55.977Z
2020-03-26T02:52:55.977Z
Mike J
<p>Why is real investment included in GDP?  I thought GDP is only supposed to measure final goods produced?  I thought capital is an intermediate good but I guess I am wrong. An intermediate good is sold eventually to the customer so prevent double counting we don’t count it. But I guess with capital it is not sold to other firms. Am I correct"</p>

<macroeconomics>
Why is investment included in GDP?
Shuheng Zheng
# Why is investment included in GDP?

(Asked by: username_0 on 2020-03-26)

Why is real investment included in GDP? I thought GDP is only supposed to measure final goods produced? I thought capital is an intermediate good but I guess I am wrong. An intermediate good is sold eventually to the customer so prevent double counting we don’t count it. But I guess with capital it is not sold to other firms. Am I correct"

**Tags:** macroeconomics

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## 1 answers

### Answer by username_1 on 2020-03-26. Score: 1

Investment is the value of machinery, plants, and buildings (capital) that are bought by firms for production purposes.

Investment contributes to many macroeconomic situations to include:

A. Contributes to current demand of capital goods, increasing domestic spending

B. Modernizes production processes and improving cost effectiveness

C. Allows for the production of new and improved products, increasing value added in production

D. Increases production capacity

The Investment types (machinery, plants, buildings) are directly linked to current and future sales (sales of final goods) of the firm.

An intermediate good is defined as the goods and services (including energy, raw materials, semi-finished goods, and services that are purchased from all sources) that are used in the production process to produce other goods or services rather than for final consumption.


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