Investment in fixed assets refers t

Investment in fixed assets refers to expenditure on new buildings, plant and machinery,
vehicles, ships and aircraft. The level of investment is subject to cyclical movements,
increasing in times of boom and falling in times of recession. The total level of investment
is called gross investment and this can be subdivided into replacement
investment, for replacing worn-out and obsolete machines, and net or new investment,
which is any investment over and above the replacement level. Table 8.3 shows the
breakdown of investment in the UK for 1995, and it can be seen that net investment
accounted for only 31 per cent of gross investment in that year so that nearly 70 per cent
of investment was for replacement purposes. The most important sector for net invest-