Investment Function, Macroeconomics Video Lecture | Macro Economics - B Com

hi in this video we will be talking
about the second component of Agri
expenditure called firms investment so
the first question that ask ourselves is
what is investment so the primary
concept of investment is actually quite
simple it is the activity of taking the
fruits from the fun and its workers and
we're going to put it back in the
production line OS X or its business
activities so that we can eventually
create or grow more fruit so the analogy
of more fruit simply means more output
and according to the a equals to Y
editor in theory more output means more
income so one of these fruits that were
talking about
um these fruits I actually left over
profits or resources such as materials
and other work-in-progress goods that
can be put back into the production you
can even use this to buy more equipment
or buy more machinery so that your
production level can increase hence more
output more goods and services more
income okay so why don't you face the
problem of not having enough fruit to
invest into your business activities or
your production line well you can simply
borrow fruit from another source like
maybe borrowing more cash on the bank to
buy more machinery or buy more materials
for your production so by understanding
the primary concept of investment what
you should typically see is a positive
relationship between the amount of
investment and national output or income
and this means that when investment
increases the national output is going
to increase and vice versa just let me
explain the chain of events when there
is more investment in the economy so
more investment means more business
activities and projects right and when
I'm o of these projects you're going to
create more jobs so the number of jobs
eventually will increase in the economy
and there are more people working these
actually increases the output in the
economy so we know that when a equals to
Y are more output means more national
income so that's good thing right so
what I've done is I've explained to you
the concept of investment in a very
modern context something that's related
to our modern economy so let's talk
about it in a more traditional context
all right so imagine a farmer that grows
wheat so he's gonna sell some of that
wheat
he's gonna eat some of that weed and
he's gonna save some of that weed right
so right now the wheat that a farmer
saves he's gonna take that wheat and
he's gonna put it back into the field
where you can actually grow more wheat
for the next season
okay so as you can see there is really
an activity of investment growing more
wheat is simply output increasing even
giving the farmer more income and the
activity of putting the safe weight back
into the field is a act of investment so
there are typically three types on
investment that is undertaken by two
major groups of people and these two
major groups of people are your firms as
well as your households okay so let's
talk about a household's investment
activities first when a household invest
we actually call this residential
investment now a household to invest
they can buy certain types of ss SS such
as stocks and shares or even property
like housing right and they buy these
assets with a speculative purpose which
means that they are looking for a
capital gain in the SS that they bought
so a capital gain actually refers to an
increase in the stock price or
appreciation in the property value so
that they can sell weight either these
stocks shares or property in the future
and a higher price to make some form of
a profit okay so this one it means by
buying assets for speculative purposes
now let's talk about a firm's investment
activities when a firm invests we call
this non-residential investment and just
like households firms can also buy
assets and hope for some kind of a
capital gain right so this is thus this
is similar to households waiting to sell
an asset at a higher price to get some
kind of a profit we call this
institutional investment
now firms can also invest in properties
plans and equipment this is an
accounting term so you those accounting
students out there
you should know why I mean now by
investing in this kind of stuff they
can't really increase their production
which means increasing the output and
therefore increase their income so
that's good stuff right thanks for
watching a sample of the quick anomic
online learning experience we hope
you've enjoyed it we believe that true
happiness lies in realizing ambitions
and dreams this why we make our products
specific to your needs simple to
understand and captivating so that you
can learn effectively while saving time
realizing those ambitions and glean the
quick anomic online learning experience
is a range of supplementary lectures
tutorials and exam solutions in the form
of videos but you can conveniently view
anytime anywhere watching our videos
before and after your regular lessons at
school we aim to give you joy in
learning and build academic confidence
at the comfort of your own relaxed
learning environment so how can you
begin we welcome you to purchase quickie
dollars to redeem the videos for full
access to the quick anomic online
learning experience thank you for
starting with pagano means
you