APMacro: IES Investment Rates and GDP per Capita


INvestment Rates and GDP per Capita 05.23.2016
The term investment is often used in a variety of ways. Investment represents actual materials, research and development purchased and used today to produce goods and services in the future. For our purposes here, we are referring to the part of investment that is reflected in GDP, specifically the spending on new equipment, software, and structures that add to a country’s stock or amount of capital. Gross Domestic Product can be separated into four components that include consumer spending, business investment spending, government spending, and net exports. (GDP = C + I + G + X) The “I” represents the amount spent on new equipment and factories, which adds to the total amount of the capital factor of production. Investment is a key factor in growing GDP.


1) Investment Rates and GDP per Capita pp.21-22

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