Asked by Simer Sidhu on Jul 22, 2024

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Which of the following would constitute an act of investment by a household, as economists use the term?

A) building a new construction vacation home
B) purchasing 100 shares of Microsoft stock
C) buying a corporate bond
D) borrowing money from the bank to pay for a vacation cruise

Investment

The allocation of resources, usually financial, into assets or projects expected to yield future returns.

Economists

Experts who study the production, distribution, and consumption of goods and services.

  • Describe investment from an economic perspective and separate it from typical financial activities.
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Patrice RICHARDSONJul 24, 2024
Final Answer :
A
Explanation :
Investment, in economic terms, refers to the creation of new capital goods, structures, or inventories. Building a new construction vacation home fits this definition as it involves the creation of a new asset. Purchasing stocks or bonds or borrowing money for consumption (like a vacation cruise) does not constitute investment in this context.