+1 862 207 3288 Investment refers to the expenditure made on new capital assets. Capital assets include machinery, equipment, building etc. they lead to increased productivity and capacity of economy. Classification of investment can be made in 2 heads:
Induced Investment:It refers to investment which is influenced directly by income and is driven by the profit expectations. This means induced investment is income elastic. It is affected by the level of production in the economy.
Autonomous Investment: Autonomous investment refers to that investment which is not influenced by level of income or level of production. It is thus, income inelastic.
Examples of autonomous investment: such investments are usually made by the government for infrastructural activities.
The value of such an investment depends on political, economic and social conditions of a nation. The change comes only if there is a technological breakthrough or when new resources are discovered.
