B Com Exam > B Com Videos > Macro Economics > Autonomous and Induced investment - The investment function, Macroeconomics
Autonomous and Induced investment - The investment function, Macroeconomics Video Lecture | Macro Economics - B Com
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FAQs on Autonomous and Induced investment - The investment function, Macroeconomics Video Lecture - Macro Economics - B Com
| 1. What is autonomous investment? |  |
Ans. Autonomous investment refers to the investment that is not influenced by changes in national income or other economic variables. It is determined by factors such as technological advancements, capital stock, and business expectations. Autonomous investment is typically made by businesses to increase their productive capacity and improve efficiency.
| 2. What is induced investment? | |
Ans. Induced investment, also known as induced expenditure, refers to the investment that is influenced by changes in national income or other economic variables. It is driven by the level of aggregate demand in the economy. When there is an increase in income or demand, businesses are more likely to invest to meet the increased demand for goods and services.
| 3. How does the investment function relate to macroeconomics? | |
Ans. The investment function is a key component of macroeconomics as it helps to understand the relationship between investment and national income. The investment function shows how changes in national income affect investment levels in an economy. It helps economists analyze the factors that drive investment decisions, such as interest rates, business expectations, and government policies, and how these decisions impact the overall economic activity.
| 4. What factors can influence autonomous investment? | |
Ans. Autonomous investment can be influenced by various factors, including technological advancements, changes in business expectations, availability of credit or financing, government policies, and overall economic stability. Technological advancements can create opportunities for businesses to invest in new machinery, equipment, or research and development. Changes in business expectations, such as improved market conditions or increased consumer demand, can also drive autonomous investment.
| 5. How does induced investment contribute to economic growth? | |
Ans. Induced investment plays a crucial role in economic growth as it helps to stimulate aggregate demand and increase production levels. When there is an increase in income or demand, businesses respond by investing in new capital goods, expanding their operations, and hiring more workers. This leads to an increase in production, employment, and overall economic activity. Induced investment acts as a multiplier effect, as increased investment leads to further income generation and subsequent rounds of investment.
Text Transcript from Video
okay this activity deals of investment
and yeah we have to draw two diagrams
the one showing that investment is
autonomous with respect to the level of
output and income in other words it's
the level of investment spending is not
being influenced by the level of output
and it is one we can assign investment
is a positive function increases there
is a corresponding increase in the level
of investment spending now to plot that
this one the autonomous spot we will put
output on this axis horizontal one I'm
the building one we put you our
investment now to show that investment
is autonomous in other words it's not
influenced by output you have another
horizontal line here meaning that
regardless of the change in output
investment spending is unchanged there
are other factors that determines that
level of investment spending in this
diagram we're gonna plot this
relationship there's positive
relationship between the investment and
the level of output once again output on
this axis spending yeah
now if the shoulder this is a positive
relationship this is not a curve will
look like indeed showing that as the
level of output increases there is a
corresponding increase in the level of
investment spending
and yeah we have to draw two diagrams
the one showing that investment is
autonomous with respect to the level of
output and income in other words it's
the level of investment spending is not
being influenced by the level of output
and it is one we can assign investment
is a positive function increases there
is a corresponding increase in the level
of investment spending now to plot that
this one the autonomous spot we will put
output on this axis horizontal one I'm
the building one we put you our
investment now to show that investment
is autonomous in other words it's not
influenced by output you have another
horizontal line here meaning that
regardless of the change in output
investment spending is unchanged there
are other factors that determines that
level of investment spending in this
diagram we're gonna plot this
relationship there's positive
relationship between the investment and
the level of output once again output on
this axis spending yeah
now if the shoulder this is a positive
relationship this is not a curve will
look like indeed showing that as the
level of output increases there is a
corresponding increase in the level of
investment spending
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Dec 23, 2024 Last updated |
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