16 INVESTMENT

16 INVESTMENT - SECTION 16 INVESTMENT AUTONOMOUS INVESTMENT Investment spending that does not depend on the level of GDP INDUCED INVESTMENT =

Info iconThis preview shows pages 1–6. Sign up to view the full content.

View Full Document Right Arrow Icon
SECTION 16: INVESTMENT
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Background image of page 2
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
AUTONOMOUS INVESTMENT Investment spending that does not depend on the level of GDP. INDUCED INVESTMENT = Investment spending that increases or decreases as GDP increases of decreases 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 NEW RESIDENTIAL CONSTRUCTION Some is autonomous and some is induced Influenced by level of interest rates
Background image of page 4
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. DESIRED INVESTMENT SPENDING = Desired plant and equipment spending + Desired new residential construction spending + Desired change in inventories ACTUAL INVESTMENT SPENDING Desired investment does not necessarily equal actual investment spending. Businesses cannot necessarily achieve their desired change in inventories.
Background image of page 5

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 6
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 04/07/2008 for the course ECON 0110 taught by Professor Kenkel during the Spring '08 term at Pittsburgh.

Page1 / 10

16 INVESTMENT - SECTION 16 INVESTMENT AUTONOMOUS INVESTMENT Investment spending that does not depend on the level of GDP INDUCED INVESTMENT =

This preview shows document pages 1 - 6. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online