With reference to the concept of "Investment", consider the following statements: 1. It refers to the money spent to buy assets such as land, building, and machines. 2. Any investment made by a multinational corporation is classified as foreign trade rather than foreign investment. 3. Investments in assets are typically made with the sole objective of tax evasion rather than earning profits. Which of the statements given above is/are correct?

The correct option is 1 only Explanation In economics, investment refers to the accumulation of capital stock. It involves expenditure on physical or financial assets that are expected to generate income or appreciate in value over time. It is a crucial component of capital formation within an economy. Statement-wise Analysis: - Statement 1 is Correct: Investment is defined as the money spent to purchase assets such as land, buildings, machines, and equipment. These assets are acquired with the expectation that they will aid in production or generate returns in the future. - Statement 2 is Incorrect: Investment made by a multinational corporation (MNC) in another country is classified as Foreign Investment (such as Foreign Direct Investment or Foreign Portfolio Investment). Foreign Trade refers to the import and export of goods and services between countries, not the acquisition of assets or capital infusion by MNCs. - Statement 3 is Incorrect: The primary economic objective of investment is to earn profits or returns (interest, dividends, capital appreciation). While tax planning may influence investment decisions, tax evasion is an illegal activity and is not the objective of legitimate economic investment. Key Takeaway: Investment is the expenditure on assets (capital formation) aimed at generating future income or profit, distinct from foreign trade which involves the exchange of goods and services.

With reference to the concept of "Investment", con... - NCERT Class 10 Economics MCQ

Solution

The correct option is

1 only

Explanation

In economics, investment refers to the accumulation of capital stock. It involves expenditure on physical or financial assets that are expected to generate income or appreciate in value over time. It is a crucial component of capital formation within an economy.

Statement-wise Analysis:

Statement 1 is Correct: Investment is defined as the money spent to purchase assets such as land, buildings, machines, and equipment. These assets are acquired with the expectation that they will aid in production or generate returns in the future.
Statement 2 is Incorrect: Investment made by a multinational corporation (MNC) in another country is classified as Foreign Investment (such as Foreign Direct Investment or Foreign Portfolio Investment). Foreign Trade refers to the import and export of goods and services between countries, not the acquisition of assets or capital infusion by MNCs.
Statement 3 is Incorrect: The primary economic objective of investment is to earn profits or returns (interest, dividends, capital appreciation). While tax planning may influence investment decisions, tax evasion is an illegal activity and is not the objective of legitimate economic investment.

Key Takeaway:

Investment is the expenditure on assets (capital formation) aimed at generating future income or profit, distinct from foreign trade which involves the exchange of goods and services.

NCERT Class 10 Economics — Chapter 4: Globalisation and the Indian Economy

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