Question

When firms purchase new capital we call this _____

Answer 1

Answer:

Business fixed investment

Explanation:

The purchase by firms of new capital goods such as machinery, factories, and office buildings. (Remember that for the purposes of calculating GDP, long-lived capital goods are treated as final goods rather than as intermediate goods.) Firms buy capital goods to increase their capacity to produce.

Answer 2

When firms purchase new capital we call this Business fixed investment.

Business Fixed investment is the purchase of new capital goods by firms which include building, installations, vehicles, technology, etc. Firms buy capital goods to improve or increase future productions which can be very vital to the growth of the firm.

Further Explanation

Capital goods are also classified as tangible assets and are also referred to as intermediate goods or economic capital.

Generally, investment is when a person spends some money to expand or start a new project or to acquire assets to create incomes and increase value over time.

Investment can be used to describe any mechanisms that are put in place to generate income which could include the purchase of bonds, real estate property, and many others. Machines, buildings and other facilities important in the process of production are also classified as an investment.

The productions of goods and services that others can purchase to produce goods and services may also be categorized as an investment.

Firms purchase new capital goods (factories, office building) to grow or expand their businesses, which in turn increases production and brings more profit.

Therefore, when firms purchase new capital we call this Business fixed investment.

LEARN MORE:

• Which current asset financing policies/approaches asserts that all of a firm's fixed assets brainly.com/question/13916170
• CAPM is the abbreviation of brainly.com/question/1213208

KEYWORDS:

• new capital
• capital goods
• firms
• office building
• machinery