investment

All income expended by firms or government agencies on capital goods for use in their productive activities. Thus aggregate investment in a national economy is the total amount of spending in order to maintain or increase the stock of physical goods not intended for immediate consumption by the purchasing entity but rather for use in producing other kinds of goods or services to be delivered to others. (Note that the economist's sense of the term is somewhat narrower than the general population's use of the term, in that the economist would exclude the purchase of purely financial paper assets like bonds or shares of stock from coverage by the term "investment".) All forms of investment thus require prior saving from income, but not all savings are for the purpose of investment.

[See also: savings, capital, interest rates, derived demand]