Aggregate Demand - Investment Flashcards
1
Q
Define: Gross investment
A
Simply the total investment made in a time period
2
Q
DefineL Net investment
A
Accounts for depreciation of assets over time. If certain capital goods need to be replaced, then these are deducted from gross investment
3
Q
_____ investment = Gross investment - Depreciation
A
Net
4
Q
Determinants of investment
A
Economic growth Business expectations and confidence Demand for exports Interest rates Access to credit Influence of government and regulations
5
Q
If demand for exports rises, _______ investment is required to meet the new demand
A
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6
Q
Low interest rates make borrowing easier and should _________ investment, while higher interest rates increase the cost of borrowing and make saving money _______ attractive than other investment projects
A
Increase
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