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Also note that "investment" here is economic investment not financial investment. It does not mean people buying stocks or bonds. It means building factories, e
by BenoitEssiambre 7y ago
Also note that "investment" here is economic investment not financial investment. It does not mean people buying stocks or bonds. It means building factories, equipment, durable goods, infrastructure, anything that lasts for a long time and helps produce more consumption in the future (these are not counted in goods and services).
GDP is an aggregate measure. When you buy a financial investment, someone else is selling it. For the aggregate it ads up to zero.
"Government costs" here means goods and services and investment that the government pays for. It's not always explicitly separated in the equation. GDP simplifies to goods+services+investment if each variable includes both what is paid for by government and by private individuals.