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What is the meaning of Investment in Macroeconomics?

It means investment incurred on creation of new capital assets

Example - New Plant and Machinery, New Building, Increase in Stock etc

 

What are different types of Investment?

It is of 2 types:

  1. Induced Investment
  2. Autonomous Investment

Difference between Induced Investment and Autonomous Investment

Difference between Induced and Autonomous Investment - Teachoo.JPG

Graph of Induced and Autonomous Investment - Teachoo.JPG

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Question 1

Explain the distinction between Induced investment and Autonomous investment.

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Transcript

Difference between Induced and Autonomous Investment Induced Investment Autonomous Investment It refers to investment which changes as per income level It refers to investment which remains fixed at different levels of income More the income, More investment At all types of income, Same investment It is induced by profit motive It is not induced by profit motive (It is normally undertaken by firms to earn profit) (It is normally undertaken by Govt seeing social economic conditions of country) Graph of Induced and Autonomous Investment Induced Investment Autonomous Investment Its curve is upward sloping it is horizontal curve parallel to x axis We do not take this into account while calculating Aggregate Demand We take this into account while calculating Aggregate Demand as per Keynes theory

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