What is investment Type of investment

1. Presentation
 What is investment ?
 Type of investment

3. Types of investments
1. Autonomous investment
2. Induced investment

4. Autonomous Investment
 Autonomous investment means investment which does not change
with the changes in the income level and is therefore independent of
income.
 This autonomous investment includes expenditure on building, dams,
roads, canals, schools, hospitals, etc.
 Since investment on these projects is generally associated with public
policy, autonomous investment is regarded as public investment.
 This autonomous investment depends more on population growth and
technical progress than on the level of income.

5. Cont…
 Autonomous investment can be represented
diagrammatically as in the figure given below.
 This means that whatever the level of income
investment remains the same.

6. Induced investment
 Induced investment is that investment which is affected by the
changes in the level of income.
 The greater the level of income, the larger will be the consumption of
the community.
 In order to produce more consumer goods, more investment has to be
made in capital goods, so that greater output of consumer goods
become possible.
 This induced investment is undertaken both in fixed capital assets and
in inventories.
 The essence of induced investment is that greater income and
therefore greater aggregate demand affects the level of investment in
the economy.

7. Cont…
 Induced investment can be presented diagrammatically as
in the figure given below.
 The figure shows that as income increases investment also
increases and as income decreases investment also
decreases.

8. Thank You