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8 December, 02:48

Which of the following does NOT constitute an act of "investment" as economists use the term?

A) A department store increases its inventory of football jerseys before the Super Bowl.

B) A retiree buys 50 shares of stock at $10 a share and then sells the stock at a profit for $20 ashare.

C) The city council authorizes the construction of a new fire station.

D) An accountant attends a seminar on changes in the federal tax code.

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  1. 8 December, 02:58
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    B) A retiree buys 50 shares of stock at $10 a share and then sells the stock at a profit for $20 ashare.

    Explanation:

    In economy an investiment is the purchase, production or use of goods today to generate wealth in the future. This means that in the present, the goods will not be consumed.

    In this problem, the only option in which the goods are consumed today is the retiree which buys the stock and then resells it.

    So the correct answer is:

    B) A retiree buys 50 shares of stock at $10 a share and then sells the stock at a profit for $20 ashare.
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