Insert prepositions

Grammar exercises

Agree or disagree. Correct wrong statements.

TEXT 4. INVESTMENTS

An addition to the circular flow of income is called an injection. Such additions will increase the level of activity in the economy. One of the ways in which funds can flow into an economy is through investment.

Investment is expenditure on productive capital goods, that is, goods which can be used to produce other goods and services. Thus, investment is expenditure on factories, machinery and other physical assets.

Investment can be categorized into net investment and gross investment.

Net investment is the one which actually increases the nation’s stock of capital goods and enables the economy to grow. However, at least a little investment is necessary to replace capital stock that is worn out or obsolete. This loss of value of assets is called depreciation. When this replacement is added to the net investment the total achieved is termed as gross investment.

Investment increases the circular flow. The amount of investments depends on the economic situation in a country. If the economy booms and the level of economic activity increases the investment will increase. On the other hand, if the level of investment declines then there will be less injections into the economy and the rate of growth of economic activity (or the national income) will fall. Economic statistics show that over the last few decades the level of gross investment in the UK economy has fluctuated. This will have been one of the factors affecting the level of national income and the environment in which businesses operate.

1. An injection is an addition to the circular flow of income.

2. Investments usually increase the level of activity in the economy.

3. Capital goods that is, factories, machinery and other assets are goods which can be used to produce other goods and services.

4. There are many types of investments.

5. The loss of value of an asset is called depreciation.

6. Usually investments increase when economic situation in the country is bad.

7. Over the last decades the level of gross investment in the UK economy has fluctuated.

2. Answer the questions on the text.

1. What will increase the level of activity in the economy?

2. What is investment?

3. What do we call productive capital goods?

4. Into what categories can investments be divided?

5. What is depreciation?

6. What does the amount of investment depend on?

7. When does an economy have the highest investments?

1. An addition … the circular flow … income is called an injection.

2. One … the ways … which funds can flow … an economy is … investment.

3. Investment is expenditure … productive capital goods.

4. The amount … investments depends … the economic situation … a country.

5. … the other hand the rate … growth … economic activity falls when there is less injections … the economy.

6. … the last few decades the level … gross investment … the UK economy has fluctuated.

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