investment

Question 1

What is investment

Answer 1

spending by firms on capital goods

Question 2

define gross investment

Answer 2

total investment on new capital inputs

Question 3

net investment

Answer 3

gross investment adjusted depreciation

Question 4

factors affecting investment

Answer 4

economic growth, business confidence, government regulation, access to credit, market interest rates

Question 5

what is the accelerator effect

Answer 5

When the economy is growing rapidly, businesses tend to increase their investment in new capital goods and technologies to meet the rising demand for goods and services. This increased investment, in turn, contributes to further economic growth.

Conversely, during an economic downturn, businesses may cut back on their investment as demand slows down. This reduction in investment can exacerbate the economic downturn.

In essence, the accelerator effect highlights the idea that the level of investment is influenced not only by the current state of the economy but also by the expected future growth or contraction. It contributes to the cyclical nature of economic activity.

Question 6

accelerator effect formula

Answer 6

Change in Investment=Multiplier×Change in Output

Question 7

what are government regulations

Answer 7

form of government intervention. EI
statutory minimum wage