Investment: Business Buys as Well as Sells
The word investment can mean several things: a purchase of stock by an individual investor, the government’s program to restore the Everglades, a college student’s investment in herself in the form of tuition, or a company’s investment in a new factory or a new fleet of trucks. Only the last of these would be counted as investment in the formula for GDP. Investment refers to business investment—money spent by businesses to expand or maintain their capacity.
Keep in mind that wages and salaries paid by companies are not included in investment. Doing so would double count wages and salaries ...