2.3 Business Investment Flashcards by Sam Heron

Q

What is gross investment?

A

Total investment on new capital inputs

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Q

What is net investment?

A

Gross investment adjusted for capital depreciation

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Q

Macro effects of a rise in investment?

A

Increase in AD
Increased productivity
Multiplier Effect

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Q

Evaluation of a rise in investment?

A

May require imports
Time lag
Capital replacing labour

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