Question : Which of the following is not a component of investment?
Option 1: In addition to residential construction
Option 2: Money spent on purchasing shares of a company
Option 3: Machinery and equipment employed by a firm
Option 4: Inventories of raw materials stocked by a firm
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Correct Answer: Money spent on purchasing shares of a company
Solution : The correct option is Money spent on purchasing shares of a company.
Money spent on purchasing shares of a company is not considered a component of investment in the traditional sense. While buying shares is a financial transaction, it is often categorized under "financial assets" rather than the classic definition of investment, which usually refers to spending on physical assets like machinery, real estate, or infrastructure that contribute to economic development and growth. In addition to residential construction, machinery and equipment employed by a firm and inventories of raw materials stocked by a firm are components of investment.
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