Investment Flashcards
1
Q
What are levels of Investment affected by?
A
- Actual and expected demand.
- Demand for exports.
- Interest rates.
- Risk
- Marginal Efficiency of Capital (MEC) - Expected return on investment at a given time -> in comparison the interest rates.
- Technological change and competitiveness.
- Business confidence.
- Bank willingness to lend.
- Accelerator effect.
- Government policy towards investment/business including corporation tax.
2
Q
What is the term ‘Animal Spirits’?
A
- Keynes’ idea of the importance of confidence and gut instinct of business people in making decisions.
3
Q
What is meant by the accelerator effect?
A
- An increase in national income will result in a proportionally larger change in investment.
4
Q
Why is Investment so important?
A
- Creates demand, increases productive potential, improves competitiveness and productivity.
5
Q
What happened to the Business Investment in the UK in 2024?
A
- Rose by 1.4 percent in Quarter 2. This marks the biggest rise since the first quarter of 2023, prompted by a growth in transport equipment and other buildings and structures.
