Investment is the formation of capital and refers to the increase of social actual capital in a certain period of time. The actual capital mentioned here includes plant, equipment, inventory and residence. Therefore, investment can also be said to be an increase in fixed equipment, inventory and houses. It can be seen that investment and capital are two different concepts. The existence of capital refers to the sum of factory buildings, machinery and equipment, houses and inventories at a certain point in time; Investment is flow, which refers to the expenditure used to increase or maintain the capital stock in a certain period of time.

Classification of investment: According to different standards, investment can be divided into many forms:

1. According to the different investment scope, it can be divided into replacement investment, net investment and total investment. Replacement investment, called depreciation compensation, refers to the investment expenditure used to maintain the integrity of the original capital stock, that is, to compensate the consumed investment in the capital stock. The amount of replacement investment depends on the amount, composition and life of existing share capital, and will not lead to the increase of original share capital. Net investment refers to the original investment expenditure to increase the capital stock, that is, the net increase of actual capital, including the net increase of buildings, equipment and inventory. The amount of net investment depends on the change of national income level and interest rate. The sum of replacement investment and net investment is total investment, which can be defined as total investment expenditure for maintaining and increasing capital stock.

2. According to different investment contents, it can be divided into non-residential fixed investment, residential investment and inventory investment. Of course, the sum of the three is still equal to the total investment

Non-residential fixed investment refers to the investment expenditure of enterprises in purchasing factories and equipment, residential investment refers to the investment expenditure of buildings and apartments, and inventory investment refers to the increase in the stock of products that have been produced but not yet sold. Generally speaking, these three kinds of investments have different proportions in the total investment and have different influences on economic fluctuations. Non-residential fixed investment accounts for the largest proportion, followed by residential investment and deposit investment is the smallest. Non-resident fixed investment marked by plant and equipment is the main part of the total investment, but it is the most stable in economic operation. Its fluctuation is very consistent with the fluctuation of economy in time, and residential investment is greatly affected by interest rate. Because most economic recessions are accompanied by rising interest rates at the beginning, residential investment declines before the decline of enterprise investment, and its decline precedes the decline of the whole economy. Although inventory investment accounts for the smallest proportion in the total investment, it has special volatility, which is the biggest among the three investments, so its impact on the economy can not be ignored.

3. According to the reasons for the formation of investment, it can be divided into spontaneous investment and induced investment. Spontaneous investment refers to the investment caused by changes in exogenous factors such as population, technology and resources; Induced investment refers to investment caused by changes in national income. At this time, the sum of spontaneous investment and induced investment is total investment.

Now let's look at the micro-foundation of investment decision. From the perspective of fixed business investment, the investment decision-making process can be divided into two processes: first, the decision-makers of enterprises decide how many factories and machinery and equipment are needed, in other words, how much capital stock is needed; Second, how do they realize the ideal capital stock determined in the first step? This is a question of investment flow.

As a manufacturer who pursues profit maximization, according to the neoclassical investment theory we know in microeconomics, the marginal productivity of capital determines the manufacturer's requirements for capital, and the capital demand curve is a function of interest rate, I=I(i), and the two change in opposite directions; Balanced investment depends on the point where interest rates are consistent with marginal productivity. The marginal output value of capital is the increase of output value obtained by using one more unit of capital. For competitive enterprises, the value of marginal productivity of capital is equal to the product price multiplied by the marginal product of capital. As long as the marginal product value of capital exceeds the rental cost, it is cost-effective for enterprises to increase the capital stock. In this way, enterprises will maintain investment until the output value generated by increasing one unit of capital is equal to the cost of using capital (that is, the rental cost of capital). In a state of equilibrium, we must

Marginal output value of capital = rental cost of capital.

Willing capital stock: Generally speaking, the willing capital stock of an enterprise can only be determined by comparing the marginal productivity and cost of a certain amount of capital.

Of course, securities also belong to investment.