Distinguishing between consumption and investment
There are some anomalies in the identification of consumption and investment. Government spending on roads, defence and education is generally scored as consumption rather than investment. Consumer spending on cars and other durable goods (items with a life of over one year) is considered to be consumption. Capital goods purchased by a financial institution and leased to an industrial company are also usually classified as consumption. Thus consumption tends to be overstated and investment under-recorded.Related topics:
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Gross Domestic Product |
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Private consumption |
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Investment |