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Which of the following would be considered investment in the calculation of GDP?(1 point)
A school district deposits excess funds into a savings account.
A child places money under his mattress for safe keeping.
A manufacturing firm builds a new plant in Mexico.
An individual purchases stock in a company.
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A manufacturing firm builds a new plant in Mexico.
Reason: GDP "investment" means spending on new capital goods (structures, equipment, inventories). Depositing money in a bank, hiding cash, or buying stocks are financial transactions (not new production) and aren’t counted as investment. Note: that plant counts as investment in the country where it’s built (Mexico), but would not count in another country’s GDP.
Reason: GDP "investment" means spending on new capital goods (structures, equipment, inventories). Depositing money in a bank, hiding cash, or buying stocks are financial transactions (not new production) and aren’t counted as investment. Note: that plant counts as investment in the country where it’s built (Mexico), but would not count in another country’s GDP.
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