16 INVESTMENT

16 INVESTMENT - 1 SECTION 16: INVESTMENT 2 3 4 AUTONOMOUS...

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1 SECTION 16: INVESTMENT
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4 AUTONOMOUS INVESTMENT Investment spending that does not depend on the level of GDP.
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5 INDUCED INVESTMENT = Investment spending that increases or decreases as GDP increases of decreases
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6 TOTAL INVESTMENT SPENDING PLANT AND EQUIPMENT SPENDING Some is autonomous and some is induced Influenced by state of the economy and by level of interest rates
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7 NEW RESIDENTIAL CONSTRUCTION Some is autonomous and some is induced Influenced by level of interest rates
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8 CHANGE IN INVENTORIES The desired change in inventories does not necessarily equal the actual change in inventories. Cannot be completely determined by business firms Consumers may buy more or less than the firm expected.
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9 DESIRED INVESTMENT SPENDING = Desired plant and equipment spending + Desired new residential construction spending + Desired change in inventories
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ACTUAL INVESTMENT SPENDING Desired investment does not necessarily equal actual investment spending. Businesses cannot necessarily achieve their desired change
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This note was uploaded on 12/13/2010 for the course ECON 0110 taught by Professor Kenkel during the Fall '08 term at Pittsburgh.

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16 INVESTMENT - 1 SECTION 16: INVESTMENT 2 3 4 AUTONOMOUS...

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