How to Calculate Gross Private Investment

Gross private investment includes purchases of physical capital.

Gross private investment includes purchases of physical capital.

Gross private investment refers to the sum that companies spend domestically on replacing inventory and buying new equipment. It's one of four components that make up the gross domestic product (GDP). You can calculate it from the GDP and the other components that make up that figure. These include personal consumption of goods and services, the nation's net exports, and the amount that the state and federal government spend on consumption and investment.

Subtract the country's aggregate personal consumption from the gross domestic product. For example, if the country has a GDP of $14.15 trillion and a personal consumption level of $10.43 trillion, subtract the latter from the former to get $3.72 trillion.

Subtract the government's consumption and investment. For example, if the government spends $2.74 trillion, subtract $2.74 trillion from $3.72 trillion to get $980 billion.

Subtract the country's net exports. For example, if the country has a trade deficit of $300 billion, subtract -$300 billion from $980 billion to get $1.28 trillion. This sum is the country's gross private investment.

 

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