The money spent on machinery designed to improve the future productivity of a firm is called investment.
Investment refers to the process of making reservations or assets with the objective of getting profit or income. In other words, investment is when assets are bought with the bigger objective of getting more out of that asset(s).
- In the given scenario of a firm, the act of buying machinery is a form of investment for the firm.
- This is because the money spent on the machinery will enable the firm to generate more income through its productivity.
- To further elaborate, the machinery bought will help in the faster or better productivity process. This will then enable the firm to give out more products to the market.
- This will in turn generate a quicker flow of profit or income for the firm.
- Thus, through the expenditure for that machinery, the firm will be able to get more out of it.
Whenever any capital good(s) is bought, it is generally with the idea of it helping the company or business to get more money out of it. This capital good will help in faster productivity thereby bringing in more inflow of money for that particular company.
Learn more about investment here:
brainly.com/question/3415409
