So GNP excludes production by foreigners in the country while GDP excludes production by citizens who live outside the country. Unlike flow variables there are certain variables, called stock variables, for which no specific time period is necessary for definition or measurement. Note - Investment does not include stocks or bonds or other financial assets. These assets only involve transfers of ownership - no physical asset is directly created because of these assets. All machines, equipments, and factories are part of business fixed investment.
Inventory investment includes changes in the stock of inventories during a period of time.
It includes only the changes and not the total stock of goods in inventories because the total stock includes past production. If inventory levels increase during a certain period, the addition measures new production that has not been sold. If inevntory levels decrease during a period, it implies that goods produced in previous periods have been sold. Since these will be included in C, I and other categories even though they are not this period's production, investment is reduced by the amount of the decrease in inventory levels to offset the inclusion of old production. Purchases of all new residential buildings are also part of investment.