Macroeconomics (Fourth Edition)
Macroeconomics (Fourth Edition)
4th Edition
ISBN: 9780393603767
Author: Charles I. Jones
Publisher: W. W. Norton & Company
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Chapter 17, Problem 1RQ
To determine

Physical investment and physical capital against financial investment and financial capital.

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Explanation of Solution

Physical investment refers to the acquisition of capital goods. Capital goods, such as equipment, structures, and software, are used for the production of other goods. Physical capital refers to the labor force or man-made products used for the manufacturing process. Financial investment refers to the acquisition of financial assets such as equity, bond, shares, and so forth. Financial assets represent a store of wealth that connects present income flows to future consumption.

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