Economics question! the basic?

Question

How does an economist's defination of investment differ from that of the ordinary man? please elaborate.

Answer 1

In economics, investment is current expenditure on capital equipment, techncial research, training etc to raise future output of goods and services.  It may take the form of financial expenditure but that is only the measure; the real value of investment is assessed in relation to its effect on eventual output.

Everyday use of the word "investment" is similar to "savings"; money put aside from consumption to buy future flows of money.

The link between the two comes in the banking or other parts of the financial sector.  Savings from households are often held as deposits in financial institutions, who lend them to firms and government.  If to the former, then it may be classed as real investment in capital equipment and so on.

OK?