How does an increase in investment spending on capital goods affect GDP in an economy?

When businesses invest more money in capital goods, like machinery and buildings, it directly increases the overall economic activity in a country. This investment spending is a key part of Gross Domestic Product (GDP), which measures the total value of goods and services produced in an economy. For example, if a factory buys new equipment to produce more products, it not only increases its production but also creates jobs and boosts income for workers. As these workers spend their earnings on goods and services, it leads to further economic growth. Therefore, more investment spending typically results in a higher GDP, showing a healthier economy.