The correct option is 2 only.
Explanation
In macroeconomics, final goods are broadly classified into Consumption Goods and Capital (Investment) Goods based on their end-use. Investment goods are durable assets used by producers to generate other goods and services over an extended period, contributing to capital formation.
Statement-wise Analysis:
- Statement 1 is Incorrect. Goods such as food and clothing, which are purchased for the direct satisfaction of human wants and are consumed immediately or over a short period, are classified as Consumption Goods. Investment goods include machinery, tools, and infrastructure that are not consumed directly by households.
- Statement 2 is Correct. Investment goods add to the physical capital stock of an economy. By enhancing productive capacity, they facilitate the production of a higher volume of goods and services in the future, thereby enabling increased future consumption.
- Statement 3 is Incorrect. Economic resources are scarce. Consequently, allocating more resources toward the production of investment goods typically requires diverting them from the production of consumption goods. This trade-off implies a sacrifice of current consumption to secure higher future production (opportunity cost).
Key Takeaway:
Investment Goods are assets used to produce other goods and drive future economic growth, whereas Consumption Goods satisfy immediate needs. Increasing investment usually requires a temporary reduction in current consumption due to resource constraints.