Final answer:
Planned investment spending is the investment that businesses intend to carry out, such as purchasing equipment or buildings, critical for economic growth. Investment in durable equipment, structures, and inventories are made by companies, while residential investments are made by households. The correct answer is investment spending that businesses plan to undertake.
Step-by-step explanation:
Planned investment spending for a given period is the investment spending that businesses plan to undertake. This includes purchasing physical plant and equipment, which is a critical part of business operations. For example, if Starbucks builds a new store or Amazon acquires robots for their warehouses, these are counted as business investment. Despite being smaller than consumption demand, typically around 15-18% of GDP, investment is crucial for economic growth and job creation. However, investment demand is noticeably more volatile compared to consumption due to factors such as new technology or changing business confidence.
What Determines Investment Expenditure?
Investment expenditure can be categorized into producer's durable equipment and software, nonresidential structures, changes in inventories, and residential structures. The first three categories are typically investments made by businesses, while investment in residential structures is usually carried out by households.