Investment and Economic Activity

14.1 The Role and Nature of Investment


  • Investment adds to the nation's capital stock.
  • Gross private domestic investment includes the construction of nonresidential structures, the production of equipment and software, private residential construction, and changes in inventories.
  • The bulk of gross private domestic investment goes to the replacement of depreciated capital.
  • Investment is the most volatile component of GDP.
  • Investment represents a choice to postpone consumption – it requires saving.