For example, as people enter the labor force, leading to a net increase in the total labor force, our nation's capability to produce goods and services also increases, assuming that these people find jobs. Improvements in technology increase worker productivity and output per worker, for a given stock of resources. For simplicity, allow only one assumption to change at a time, holding everything else constant at the normal assumption. In an economic sense, investment is the actual purchase of plant and equipment by firms. In a personal context, investment includes the purchase of stocks and bonds issued by corporations, which for the purposes of this course is known as savings.
Personal savings is defined as the difference between disposable income and expenditures.
We do not count your purchase of a corporation's stock as investment. But when the company sells you stock, they normally use the proceeds to buy additional capital, so the value of the purchase is counted as investment. Be sure to read the correct options in this question carefully.