A Level Economics Investments, Rates and Imports
Define: Investment, Real GDP, Aggregate Demand and the Bank of England
- An investment is a purchase involving goods that have an effect over a period of time. The investment is made on certain good or company. In the long term this results in future production and profit for the investor. E.g. I may invest in a large supply of ingredients for a recipe used in a pie business. The goods bought in the investment will be used to make the pies which would then be sold at my shop.
Real GDP is the gross domestic product that accounts for any recent changes in price levels of goods in the country. This makes for a more accurate rate of GDP. E.g. I have £1 million pounds in 2012 but because of an inflation in 2008 which was the base year, I could have a value of much less money. The real GDP could go down to £750,000. Real GDP includes changes in inflation whereas normal GDP does not.