2.2.3 Investment

Question 1

what is net investment

Answer 1

• Spending on capital assets

- building, machinery and equipment

Question 2

what is gross investment

Answer 2

• total amount that the economy spends on new capital

- includes value of capital depreciation

Question 3

what is capital depletion

Answer 3

-Depletion is to determine the expense of extracting natural resources from the earth, such as wood, minerals, and oil.

Question 4

what is capital depreciation

Answer 4

• Decline in value of a capital asset

Question 5

what are interest Rates

Answer 5

• The cost of borrowing money.

Question 6

what’s the relationship between economic growth and level of investment

Answer 6

• An increase in investment, it will help to boost AD and short-run economic growth

Question 7

what’s the relationship between business confidence and level of investment

Answer 7

• Higher the confidence, the more likely a business will invest

Question 8

What is animal spirits

Answer 8

• collective moods of investors

Question 9

what is the relationship between demand for exports and level of investment

Answer 9

• If the demand for exports is high, businesses will invest in the economy and in capital to make sure the demand is met

Question 10

How the Government might encourage investment

Answer 10

• Lower interest rates

- Subsidies