Question

Societies choose what share of their resources to devote to consumption and what share to devote to investment. Some of these decisions involve private spending; others involve government spending.
For each form of private spending, indicate whether it represents consumption or investment.
Private Spending Consumption Investment
Laundromats buying washing machines
People buying houses
People buying newspapers
People buying food
For each form of government spending, indicate whether it represents consumption or investment.
Government Spending Consumption Investment
Payment for public safety employees
Building hospitals
Building roads
Buying military equipment

Answer 1

Explanation:

Note, for private spending, consumption refers to purchases usually made for present needs, while investment refers to purchases that may provide. For government spending, consumption refers to purchase made to care for the immediate welfare or needs of those governed without any monetary benefits, while investment purchases are done with the perceived future benefits in mind.

Private Spending

• Laundromats buying washing machines =  Investment
• People buying houses  = Investment
• People buying newspapers  = Consumption
• People buying food = Consumption

Government Spending

• Payment for public safety employees = Investment
• Building hospitals = Investment
• Building roads = Investments
• Buying military equipment = Investment