Economics (MindTap Course List)

13th Edition
Roger A. Arnold
ISBN: 9781337617383



Economics (MindTap Course List)

13th Edition
Roger A. Arnold
ISBN: 9781337617383
Textbook Problem

Write an investment function (equation) that specifies two components:

  1. a. Autonomous investment spending
  2. b. Induced investment spending

To determine

The investment functions with autonomous investment and induced investment.


The investment is a process of spending some money at present in expectation of a larger profit in the future from the economy. There are mainly two components for the investment function, similarly as the savings function and they are the autonomous investment spending and the induced investment spending.

The autonomous investment spending is the portion of the investment spending that is independent of the level of income of the economy. Thus, it can be summarized as the investment spending at zero levels of income. On the other hand, the induced investment spending is the portion of investment spending that is dependent on the level of disposable income in the economy...

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