Investment refers to any increase in the capital stock of an economy.
Investment takes place when firms use some of the money which they have earnt to expand their operations. This could be the purchase of new machinery, building a new office or factory, or hiring more workers etc.
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Capital stock – the total amount of assets which are available to be used in the production of goods and services.
Human capital – the abilities of labour to perform given tasks with an attached economic value.
Physical capital – man-made resources which are used in the production of goods and services.