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Which of the following is not an investment expenditure in goods and services?
- a)Purchase of a house
- b)Purchase of machinery
- c)An increase in business inventories
- d)Expansion of the main plant of a company
Correct answer is option 'C'. Can you explain this answer?
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Which of the following is not an investment expenditure in goods and ...
Expenditure method: national income is measured as a flow of expenditure. It includes the sum of private consumption expenditure: government consumption expenditure, gross capital formation (Government and private), and net exports (Export-Import).
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Which of the following is not an investment expenditure in goods and ...
Understanding Investment Expenditure
Investment expenditure typically refers to the purchase of goods and services that will be used for future production or consumption. It generally includes fixed assets and improvements that contribute to long-term economic growth.
Analysis of Options
- Purchase of a house: This is considered an investment expenditure. Residential properties are durable goods that provide shelter and can appreciate over time, contributing to the economy.
- Purchase of machinery: This is also classified as investment expenditure. Machinery is a capital good that businesses use to produce goods and services, enhancing efficiency and productivity.
- An increase in business inventories: This is the key option that does not qualify as investment expenditure in the traditional sense. While inventory increases are related to business operations, they are considered part of operational costs rather than long-term investments. Inventories are temporary holdings that can fluctuate based on production and sales cycles, hence not contributing to long-term capital formation.
- Expansion of the main plant of a company: This is an investment expenditure. Expanding a plant involves significant capital investment aimed at increasing production capacity, thereby supporting long-term growth.
Conclusion
In summary, while options a, b, and d represent significant investments in long-term assets, option c (an increase in business inventories) is not considered an investment expenditure in the same manner. It reflects short-term operational adjustments rather than a strategic investment in long-term productive capacity.
Investment expenditure typically refers to the purchase of goods and services that will be used for future production or consumption. It generally includes fixed assets and improvements that contribute to long-term economic growth.
Analysis of Options
- Purchase of a house: This is considered an investment expenditure. Residential properties are durable goods that provide shelter and can appreciate over time, contributing to the economy.
- Purchase of machinery: This is also classified as investment expenditure. Machinery is a capital good that businesses use to produce goods and services, enhancing efficiency and productivity.
- An increase in business inventories: This is the key option that does not qualify as investment expenditure in the traditional sense. While inventory increases are related to business operations, they are considered part of operational costs rather than long-term investments. Inventories are temporary holdings that can fluctuate based on production and sales cycles, hence not contributing to long-term capital formation.
- Expansion of the main plant of a company: This is an investment expenditure. Expanding a plant involves significant capital investment aimed at increasing production capacity, thereby supporting long-term growth.
Conclusion
In summary, while options a, b, and d represent significant investments in long-term assets, option c (an increase in business inventories) is not considered an investment expenditure in the same manner. It reflects short-term operational adjustments rather than a strategic investment in long-term productive capacity.
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Which of the following is not an investment expenditure in goods and services?a)Purchase of a houseb)Purchase of machineryc)An increase in business inventoriesd)Expansion of the main plant of a companyCorrect answer is option 'C'. Can you explain this answer?
Question Description
Which of the following is not an investment expenditure in goods and services?a)Purchase of a houseb)Purchase of machineryc)An increase in business inventoriesd)Expansion of the main plant of a companyCorrect answer is option 'C'. Can you explain this answer? for SSC 2024 is part of SSC preparation. The Question and answers have been prepared according to the SSC exam syllabus. Information about Which of the following is not an investment expenditure in goods and services?a)Purchase of a houseb)Purchase of machineryc)An increase in business inventoriesd)Expansion of the main plant of a companyCorrect answer is option 'C'. Can you explain this answer? covers all topics & solutions for SSC 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Which of the following is not an investment expenditure in goods and services?a)Purchase of a houseb)Purchase of machineryc)An increase in business inventoriesd)Expansion of the main plant of a companyCorrect answer is option 'C'. Can you explain this answer?.
Which of the following is not an investment expenditure in goods and services?a)Purchase of a houseb)Purchase of machineryc)An increase in business inventoriesd)Expansion of the main plant of a companyCorrect answer is option 'C'. Can you explain this answer? for SSC 2024 is part of SSC preparation. The Question and answers have been prepared according to the SSC exam syllabus. Information about Which of the following is not an investment expenditure in goods and services?a)Purchase of a houseb)Purchase of machineryc)An increase in business inventoriesd)Expansion of the main plant of a companyCorrect answer is option 'C'. Can you explain this answer? covers all topics & solutions for SSC 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Which of the following is not an investment expenditure in goods and services?a)Purchase of a houseb)Purchase of machineryc)An increase in business inventoriesd)Expansion of the main plant of a companyCorrect answer is option 'C'. Can you explain this answer?.
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