The Distinction Between Consumption and Investment Is

question 22

Multiple Choice

The distinction between consumption and investment is:

• A)that only households consume and only businesses invest.
• B)somewhat arbitrary, since investment includes housing investment, which does not increase future productive capacity.
• C)that investment always increases future productive capacity, while consumption does not.
• D)arbitrary, since the same expenditure may be counted as a consumption item in one year and an investment in another.

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Definitions:

Promise

An assurance given by one party to another agreeing to do or not do something in the future.

Insolvent

Refers to the condition of an individual or entity that cannot pay its debts when they are due.

Serve Process

The procedure by which a party to a lawsuit gives an appropriate notice of initial legal action to another party (defendant or respondent) in order to exercise jurisdiction over that person.

Admission

The process of being accepted into an organization or institution, or the acknowledgment of a fact or truth.