One of the following expenditure is an example of investment expenditure

Options

A. an entrepreneur purchasing a computer for domestic use
B. a firm purchasing raw material: final production
C. an entrepreneur buying plane tickets for a family trip.
D. a firm purchasing computer for smooth maintenance of accounts

Answer

C

Explanation

Investment Expenditures refer to expenditure made by the business sector on final goods and services, or gross domestic product, especially the purchase of productive capital goods. It is expenditure done by firms buying capital equipment and production-related items needed to maintain or expand their business activity. So a firm purchasing raw materials for final production is an example of invest ment expenditure. Raw materials purchased by the firm are a final good as it is to be finally used by the producer in the process of production.