What is Investment in national income class 12, definition, types, examples?


I have discussed the concept of Investment as given in National Income chapter of economics class 12 CBSE Board.

What we read here is what is considered as investment in economics. Its definition and would understand its concepts with few examples.

Define Investment

Addition made to the stock of capital during a period is called investment.

Book, S.K Aggarwal

Note:- It is also called Capital Formation

Difference between Capital and Investment

Capital vs Investment

The Capital Goods added to this capital during the year, is called investmentThe accumuated stock of Capital goods at the begining of the year is called capital

Note:- Capital & Investment consist of Capital Goods

Types of Investment

Fixed and Stock Investment

Fixed Investment

Investment in fixed capital called fixed investment i.e. machinery, furniture etc.

Stock Investment

Investments in stock of raw materials, semi-finished goods and finished goods Stock investment. i.e. goods to be sold.

Examples of Investment

Investment is assumed to be made only by the producer, not by the consumer at all.

Examples of fixed investment are machinery, furniture, building etc.

Examples of Stock investment are raw material, semi-finished goods and finished goods.


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