Which of the following is NOT considered an economic investment?

• A. A government building a new highway
• B. An individual buying shares of stock in a company
• C. A business constructing a new office building
• D. A firm purchasing new machinery for its factory

Answer: (B)

Verified step by step guidance

1. Step 1: Understand the concept of economic investment. Economic investment refers to the purchase of new capital goods that will be used to produce other goods and services in the future. This includes spending on physical assets like buildings, machinery, and infrastructure.
2. Step 2: Identify examples of economic investment from the options. For instance, a government building a new highway, a business constructing a new office building, and a firm purchasing new machinery are all investments in physical capital that contribute to production capacity.
3. Step 3: Recognize that buying shares of stock is a financial investment, not an economic investment. It represents a transfer of ownership or claims on existing assets rather than the creation of new capital goods.
4. Step 4: Conclude that among the options, the activity that is NOT considered an economic investment is the individual buying shares of stock, because it does not directly increase the economy's productive capacity.
5. Step 5: Summarize that economic investment involves spending on new physical capital, while financial investments involve buying financial assets like stocks or bonds.