6 investment and_investment_function
•
5 likes•3,945 views
1. Investment refers to the net addition to existing capital assets like machines, factories, and plants that create additional employment. It does not include purchases of existing assets. 2. The level of investment is determined by the marginal efficiency of capital (MEC), which depends on the prospective yield of a capital asset and its supply price. Investment will occur when the MEC is higher than the prevailing interest rate. 3. Factors like expected demand, costs, interest rates, tax policies, financing constraints, technology, and business confidence influence the MEC and the volume of investment in both the short-run and long-run.
Report
Share
Report
Share
Download to read offline
Recommended
Multiplier Chapter 9
This document discusses key economic concepts including consumption, saving, the multiplier effect, investment demand, and how changes in government spending and taxes can impact GDP through the multiplier. It provides examples of how an initial $1,000 change in spending can multiply into $2,000 in total income due to subsequent rounds of spending. It also notes that the size of the multiplier depends on the marginal propensity to consume.
Structuralist theory of inflation
This document outlines the structural theory of inflation in less developed countries. It discusses how structural defects and bottlenecks exist in these economies that cause inflation, making the traditional quantity theory of money not applicable. Three main types of bottlenecks are described: agricultural bottlenecks due to issues like land ownership that limit food production growth; government resource constraints that force them to print money to fund infrastructure projects leading to inflation; and foreign exchange bottlenecks from low exports and high import payments causing currency devaluations and price increases. The structural theory argues these bottlenecks must be addressed through balanced investment instead of just monetary or demand-side policies to effectively reduce inflation in less developed economies.
Chapter 19 Classical vs. Keynesian
The document discusses different macroeconomic theories including:
- Classical economists believed in full employment and laissez-faire markets.
- Keynesians believe active government policy is needed to stabilize the economy due to unstable aggregate demand and downwardly inflexible prices and wages.
- Monetarists like Milton Friedman advocated for a monetary rule where the money supply increases 3-5% annually. They believe velocity is stable.
- New Keynesians see the economy as potentially unstable due to changes in investment and supply shocks. They support monetary policy targeting interest rates in the short-run and money supply in the long-run.
Model of endogenous growth the ak model
This document provides an overview of the AK model of endogenous economic growth. It discusses how the AK model addresses limitations of previous exogenous growth models. The key aspects of the AK model are:
- It models economic output as a linear function of capital stock, without diminishing returns to capital.
- This allows for perpetual long-run growth, unlike exogenous models which predict convergence to a steady state.
- The growth rate depends on savings rate and the level of technology, represented by the parameter A. Improvements in A can permanently increase the growth rate.
Demand and supply of money
Money was not used in early history as exchanges were done through bartering. Definitions of money include anything widely accepted for payments or that acts as a medium of exchange, store of value, and unit of account. Money serves four main functions: medium of exchange, store of value, unit of account, and deferred payment. The money supply is the total amount of money available in an economy and is composed of currency and demand deposits. It is determined by the monetary base and money multiplier. Money supply measurements include M0, M1, M2, M3, and M4. Inflation is a sustained increase in the general price level and can be caused by an increase in the money supply, decrease in goods supply
Keynesian theory
Keynesian theory rejects Say's law that supply creates its own demand. It argues that the level of income and employment is determined by aggregate demand and supply in the short run, and that equilibrium could be below full employment. The key determinants of income are consumption, investment, and saving. The effective demand curve shows equilibrium between aggregate demand and supply. Keynes believed full employment could be achieved by increasing aggregate demand through policies like government spending.
IS LM equilibrium
This document discusses the IS-LM model of macroeconomic equilibrium. It provides the following key points:
1. The IS curve and LM curve represent equilibrium in the goods/commodity market and money market respectively, with their intersection representing overall macroeconomic equilibrium.
2. At the equilibrium point, aggregate demand equals aggregate supply in the goods market, and money demand equals money supply.
3. The IS-LM model integrates monetary and fiscal policy and is based on factors like investment demand, consumption, and money demand/supply. Changes to these factors shift the curves and alter the equilibrium level of income.
4. The model is criticized for assuming interest rates are flexible and markets are independent,
Quantity theory of money
1) Statement to Quantity Theory of Money
2) Graph illustration and Pictorial description of QTM
3) Different Approaches to QTM
4) Fisher's Transaction Approach Description
5) Assumptions of Fisher's Transaction Approach
6) Conclusion
Recommended
Multiplier Chapter 9
This document discusses key economic concepts including consumption, saving, the multiplier effect, investment demand, and how changes in government spending and taxes can impact GDP through the multiplier. It provides examples of how an initial $1,000 change in spending can multiply into $2,000 in total income due to subsequent rounds of spending. It also notes that the size of the multiplier depends on the marginal propensity to consume.
Structuralist theory of inflation
This document outlines the structural theory of inflation in less developed countries. It discusses how structural defects and bottlenecks exist in these economies that cause inflation, making the traditional quantity theory of money not applicable. Three main types of bottlenecks are described: agricultural bottlenecks due to issues like land ownership that limit food production growth; government resource constraints that force them to print money to fund infrastructure projects leading to inflation; and foreign exchange bottlenecks from low exports and high import payments causing currency devaluations and price increases. The structural theory argues these bottlenecks must be addressed through balanced investment instead of just monetary or demand-side policies to effectively reduce inflation in less developed economies.
Chapter 19 Classical vs. Keynesian
The document discusses different macroeconomic theories including:
- Classical economists believed in full employment and laissez-faire markets.
- Keynesians believe active government policy is needed to stabilize the economy due to unstable aggregate demand and downwardly inflexible prices and wages.
- Monetarists like Milton Friedman advocated for a monetary rule where the money supply increases 3-5% annually. They believe velocity is stable.
- New Keynesians see the economy as potentially unstable due to changes in investment and supply shocks. They support monetary policy targeting interest rates in the short-run and money supply in the long-run.
Model of endogenous growth the ak model
This document provides an overview of the AK model of endogenous economic growth. It discusses how the AK model addresses limitations of previous exogenous growth models. The key aspects of the AK model are:
- It models economic output as a linear function of capital stock, without diminishing returns to capital.
- This allows for perpetual long-run growth, unlike exogenous models which predict convergence to a steady state.
- The growth rate depends on savings rate and the level of technology, represented by the parameter A. Improvements in A can permanently increase the growth rate.
Demand and supply of money
Money was not used in early history as exchanges were done through bartering. Definitions of money include anything widely accepted for payments or that acts as a medium of exchange, store of value, and unit of account. Money serves four main functions: medium of exchange, store of value, unit of account, and deferred payment. The money supply is the total amount of money available in an economy and is composed of currency and demand deposits. It is determined by the monetary base and money multiplier. Money supply measurements include M0, M1, M2, M3, and M4. Inflation is a sustained increase in the general price level and can be caused by an increase in the money supply, decrease in goods supply
Keynesian theory
Keynesian theory rejects Say's law that supply creates its own demand. It argues that the level of income and employment is determined by aggregate demand and supply in the short run, and that equilibrium could be below full employment. The key determinants of income are consumption, investment, and saving. The effective demand curve shows equilibrium between aggregate demand and supply. Keynes believed full employment could be achieved by increasing aggregate demand through policies like government spending.
IS LM equilibrium
This document discusses the IS-LM model of macroeconomic equilibrium. It provides the following key points:
1. The IS curve and LM curve represent equilibrium in the goods/commodity market and money market respectively, with their intersection representing overall macroeconomic equilibrium.
2. At the equilibrium point, aggregate demand equals aggregate supply in the goods market, and money demand equals money supply.
3. The IS-LM model integrates monetary and fiscal policy and is based on factors like investment demand, consumption, and money demand/supply. Changes to these factors shift the curves and alter the equilibrium level of income.
4. The model is criticized for assuming interest rates are flexible and markets are independent,
Quantity theory of money
1) Statement to Quantity Theory of Money
2) Graph illustration and Pictorial description of QTM
3) Different Approaches to QTM
4) Fisher's Transaction Approach Description
5) Assumptions of Fisher's Transaction Approach
6) Conclusion
The theory of multiplier and acceleration principle chapter 3
The theory of multiplier and acceleration principle chapter 3, functioning of investment multiplier, the process of income generation through multiplier, acceleration principle, limitations of multiplier and acceleration.
Keynesian economics
John Maynard Keynes was an influential 20th century English economist known for developing Keynesian economics. Some of his key ideas included that employment is determined by effective demand, which depends on aggregate supply and demand. Consumption and investment determine aggregate demand, with consumption depending on income and propensity to consume. The multiplier effect means that a change in investment leads to a proportional change in national income and output. Interest rates are determined by the supply of money and liquidity preference. Keynes argued governments could fight unemployment through fiscal policy like taxation and public investment.
Principles of economics the investment function
Producers independently make investment decisions based on factors like replacing machinery, expanding production, and building new facilities. The level of national income does not decisively determine investment in the way it determines consumption. Four key factors influence autonomous investment: 1) the technology level, 2) the interest rate, 3) expectations of future economic growth, and 4) the rate of capacity utilization. Investment spending in the US economy is volatile as these factors can both work together to increase growth or pull in opposing directions. Unlike stable consumption, investment is subject to erratic fluctuations over short periods as shown in the annual rates of change from 1960 to 1995.
MACROECONOMICS-CH11
1. The document discusses the IS-LM model and how it can be used to analyze the effects of fiscal and monetary policy. It presents the IS and LM curves and how they represent equilibrium in the goods and money markets.
2. Fiscal policy like increases in government spending can shift the IS curve right, raising output and interest rates. Monetary policy like increases in the money supply can shift the LM curve down, lowering interest rates and raising output.
3. Shocks to aggregate demand are analyzed using the IS-LM model, and the model can also show the transition from short-run to long-run equilibrium when prices adjust over time.
INFLATION : NATURE,EFFECT AND CONTROL
Inflation is defined as a sustained increase in the general price level of goods and services in an economy over time. It can be caused by factors on both the demand side, such as an increase in money supply, and the supply side, such as a rise in production costs. Inflation is measured by indexes that track changes in consumer prices (CPI) or wholesale prices (WPI) over time. There are different views on the causes and solutions for inflation, with Keynesians focusing on demand management and monetarists emphasizing the role of money supply.
Transmission Mechanism of Monetary Policy
The document discusses the transmission mechanism of monetary policy through four key points:
1. It introduces the transmission mechanism and defines it as the series of links between monetary policy changes and their impacts on output, employment, and inflation.
2. It outlines the session, which will cover the impact of interest rate changes on other interest rates, consumption, and investment.
3. It provides brief definitions and discussions of consumption and investment, and how monetary policy influences them through several channels like interest rates, asset prices, and exchange rates.
4. It notes that monetary policy is likely to influence aggregate demand in various ways and that the relationship between interest rates and aggregate demand is complex, being influenced by expectations and time
Theory of employment
The document discusses the meaning and types of employment and unemployment. It defines employment as engaging in gainful work, and unemployment as not being engaged in work. There are different types of unemployment, including voluntary, involuntary, frictional, technical, structural, cyclical, and seasonal. The classical theory of employment from Adam Smith, Pigou, Ricardo and Mill holds that full employment is normal in the long run in a free market economy, and that involuntary unemployment should not exist except due to government or union intervention.
ACCELERATOR THEORY OF INVESTMENT
The document discusses the accelerator theory of investment. It explains that the accelerator principle states that an increase in a firm's output will require a proportional increase in its capital stock. The accelerator coefficient (v) represents the ratio of induced investment to an initial change in consumption. The naive accelerator model holds that net investment (Int) is equal to v multiplied by the change in output (ΔYt). Refinements to the simple accelerator model include allowing for asymmetrical reactions to increases and decreases in output, and assuming variable rather than fixed technical coefficients of production.
Rostow's stages of development
Rostow's Stages of Development proposes that countries pass through 5 stages as their economies grow: 1) Traditional Society based on subsistence agriculture; 2) Preconditions for Take-Off as manufacturing develops and technology/trade increase; 3) Take-Off period of extensive growth and industrialization; 4) Drive to Maturity as standards of living rise through increased technology and economic diversification; 5) High Mass Consumption as individual incomes rise beyond essentials and consumer demand grows. The model is criticized for assuming all countries develop the same way without variations, while its advantage is being a widely cited and respected development theory.
Monetary policy
Monetary policy,objectives, instruments of credit control and transmission mechanism of monetary policy
Absolute income hypothesis
This document outlines the Absolute Income Hypothesis theory presented by Keynes in 1936. The theory states that as absolute income increases, the proportion of that income spent on consumption decreases. So while consumption increases with more income, the rate of increase declines. Key points include consumption (C) increasing at a decreasing rate as income (Y) rises, the average propensity to consume (APC) decreasing as income rises, and the theory showing consumption-income relationships in both the short run and long run.
IS LM analysis
describes meaning of IS and LM curve and derivation of IS and LM curve through diagrammatic explanation.
Monetary policy
Monetary policy refers to actions taken by central banks to control money supply and credit conditions in order to promote economic growth and stability. The key objectives of monetary policy are full employment, price stability, economic growth, and balance of payments equilibrium. Central banks use both quantitative and qualitative instruments to achieve these objectives. Quantitative instruments include open market operations, bank rate changes, and reserve requirement ratios. Qualitative instruments include credit rationing, margin requirements, and moral suasion. Recent trends in India's monetary policy include keeping the repo rate unchanged at 8% while reducing statutory liquidity ratio requirements.
Investment function
Investment can be defined and categorized in several ways. It includes the expenditure on real capital formation like new machines, buildings, and inventory. Investment can be autonomous or induced by income, private or public based on ownership, gross or net based on changes in capital stock, ex-ante or ex-post based on objectives, and categorized by propensity to invest. The marginal efficiency of capital and interest rate are key determinants of investment. Government policies aim to promote investment through measures like lowering interest rates, taxes, and increasing spending.
Inflation
Simple Explanation on Inflation. Consumer Price Index. Monetary & fiscal Policy. Inflation in India, Types of Inflation
Bain’s limit pricing model
The document discusses Bain's limit pricing model. It states that under Bain's model, oligopoly firms do not maximize profits in the short run due to fear of attracting potential new entrants. Instead, firms fix a price on the inelastic portion of the demand curve called the limit price, which is the highest price that deters new firm entry. The limit price allows existing firms to earn abnormal profits above competitive levels but below monopoly profits, maintaining market stability. Diagrams are included showing the limit price between the perfect competition and monopoly price points.
Unit 3 multiplier & super multiplier
The document discusses the Keynesian multiplier theory and the concept of the multiplier. It explains that the multiplier captures the cumulative effect of a change in investment on national income through induced consumption. The value of the multiplier depends on the marginal propensity to consume (MPC) and is determined as 1/(1-MPC). The document provides an example of the multiplier process showing how an initial investment leads to increasing rounds of consumption and income. It also discusses some assumptions and limitations of the multiplier model.
Baumol's model of demand for money
The Baumol model describes money demand as a tradeoff between liquidity and interest rate returns. It assumes consumers can keep income as cash or in savings accounts. Cash earns no interest while savings accounts pay interest i, the opportunity cost of holding cash. Consumers minimize costs by choosing the optimal number of trips N to the bank to withdraw cash. Their average money holdings is Y/2N. The Baumol-Tobin money demand function shows real money demand depends positively on income and withdrawal costs, and negatively on the interest rate.
Tobin’s q theory
Tobin's q theory is a ratio that compares the market value of a company to the replacement cost of its assets. A ratio below 1 implies the stock is undervalued, while above 1 means it is overvalued. This ratio is used to inform investment decisions. It is calculated by dividing a firm's market value by the book value of its assets. While Tobin's q theory was shown to predict investment in 1960-1974, later data showed the ratio and investment diverging, calling into question how accurately it forecasts capital expenditures.
Market structure oligopoly
- Oligopoly is characterized by a few large sellers that dominate a market. The decisions of each seller impact and are impacted by competitors.
- Under the Cournot model, two sellers of homogeneous products will each produce 1/3 of total market output and charge the same price to reach an equilibrium.
- The kinked demand curve model explains price rigidity in oligopolies. Each firm believes rivals will match price cuts but not increases, giving the demand curve a "kink" where it is inelastic below and elastic above the prevailing price. This removes incentives for firms to change prices.
investment function presentation
This document discusses various concepts related to investment in economics. It defines real investment as expenditure that enhances production capacity, such as spending on plant and machinery. It also defines financial investment, induced and autonomous investment, private and public investment, gross and net investment, voluntary and involuntary investment. The document discusses factors that influence investment decisions like the marginal efficiency of capital and interest rates. It outlines different government policies that can be used to encourage investment, such as reducing interest rates, taxes, or using deficit financing. Overall, the document provides an overview of key investment-related terms and concepts in economics.
Consumption And Investment Function
This document provides information on consumption, investment, and savings functions. It defines consumption as the use of goods and services by households. Investment is expenditures on capital goods for future income generation. Savings are disposable income left over after consumption expenditures. The document discusses consumption and investment functions, which relate these variables to income. It also outlines factors that determine consumption, investment, and savings like income, interest rates, and expectations. The document concludes with a case study comparing consumption functions in India and Iran.
More Related Content
What's hot
The theory of multiplier and acceleration principle chapter 3
The theory of multiplier and acceleration principle chapter 3, functioning of investment multiplier, the process of income generation through multiplier, acceleration principle, limitations of multiplier and acceleration.
Keynesian economics
John Maynard Keynes was an influential 20th century English economist known for developing Keynesian economics. Some of his key ideas included that employment is determined by effective demand, which depends on aggregate supply and demand. Consumption and investment determine aggregate demand, with consumption depending on income and propensity to consume. The multiplier effect means that a change in investment leads to a proportional change in national income and output. Interest rates are determined by the supply of money and liquidity preference. Keynes argued governments could fight unemployment through fiscal policy like taxation and public investment.
Principles of economics the investment function
Producers independently make investment decisions based on factors like replacing machinery, expanding production, and building new facilities. The level of national income does not decisively determine investment in the way it determines consumption. Four key factors influence autonomous investment: 1) the technology level, 2) the interest rate, 3) expectations of future economic growth, and 4) the rate of capacity utilization. Investment spending in the US economy is volatile as these factors can both work together to increase growth or pull in opposing directions. Unlike stable consumption, investment is subject to erratic fluctuations over short periods as shown in the annual rates of change from 1960 to 1995.
MACROECONOMICS-CH11
1. The document discusses the IS-LM model and how it can be used to analyze the effects of fiscal and monetary policy. It presents the IS and LM curves and how they represent equilibrium in the goods and money markets.
2. Fiscal policy like increases in government spending can shift the IS curve right, raising output and interest rates. Monetary policy like increases in the money supply can shift the LM curve down, lowering interest rates and raising output.
3. Shocks to aggregate demand are analyzed using the IS-LM model, and the model can also show the transition from short-run to long-run equilibrium when prices adjust over time.
INFLATION : NATURE,EFFECT AND CONTROL
Inflation is defined as a sustained increase in the general price level of goods and services in an economy over time. It can be caused by factors on both the demand side, such as an increase in money supply, and the supply side, such as a rise in production costs. Inflation is measured by indexes that track changes in consumer prices (CPI) or wholesale prices (WPI) over time. There are different views on the causes and solutions for inflation, with Keynesians focusing on demand management and monetarists emphasizing the role of money supply.
Transmission Mechanism of Monetary Policy
The document discusses the transmission mechanism of monetary policy through four key points:
1. It introduces the transmission mechanism and defines it as the series of links between monetary policy changes and their impacts on output, employment, and inflation.
2. It outlines the session, which will cover the impact of interest rate changes on other interest rates, consumption, and investment.
3. It provides brief definitions and discussions of consumption and investment, and how monetary policy influences them through several channels like interest rates, asset prices, and exchange rates.
4. It notes that monetary policy is likely to influence aggregate demand in various ways and that the relationship between interest rates and aggregate demand is complex, being influenced by expectations and time
Theory of employment
The document discusses the meaning and types of employment and unemployment. It defines employment as engaging in gainful work, and unemployment as not being engaged in work. There are different types of unemployment, including voluntary, involuntary, frictional, technical, structural, cyclical, and seasonal. The classical theory of employment from Adam Smith, Pigou, Ricardo and Mill holds that full employment is normal in the long run in a free market economy, and that involuntary unemployment should not exist except due to government or union intervention.
ACCELERATOR THEORY OF INVESTMENT
The document discusses the accelerator theory of investment. It explains that the accelerator principle states that an increase in a firm's output will require a proportional increase in its capital stock. The accelerator coefficient (v) represents the ratio of induced investment to an initial change in consumption. The naive accelerator model holds that net investment (Int) is equal to v multiplied by the change in output (ΔYt). Refinements to the simple accelerator model include allowing for asymmetrical reactions to increases and decreases in output, and assuming variable rather than fixed technical coefficients of production.
Rostow's stages of development
Rostow's Stages of Development proposes that countries pass through 5 stages as their economies grow: 1) Traditional Society based on subsistence agriculture; 2) Preconditions for Take-Off as manufacturing develops and technology/trade increase; 3) Take-Off period of extensive growth and industrialization; 4) Drive to Maturity as standards of living rise through increased technology and economic diversification; 5) High Mass Consumption as individual incomes rise beyond essentials and consumer demand grows. The model is criticized for assuming all countries develop the same way without variations, while its advantage is being a widely cited and respected development theory.
Monetary policy
Monetary policy,objectives, instruments of credit control and transmission mechanism of monetary policy
Absolute income hypothesis
This document outlines the Absolute Income Hypothesis theory presented by Keynes in 1936. The theory states that as absolute income increases, the proportion of that income spent on consumption decreases. So while consumption increases with more income, the rate of increase declines. Key points include consumption (C) increasing at a decreasing rate as income (Y) rises, the average propensity to consume (APC) decreasing as income rises, and the theory showing consumption-income relationships in both the short run and long run.
IS LM analysis
describes meaning of IS and LM curve and derivation of IS and LM curve through diagrammatic explanation.
Monetary policy
Monetary policy refers to actions taken by central banks to control money supply and credit conditions in order to promote economic growth and stability. The key objectives of monetary policy are full employment, price stability, economic growth, and balance of payments equilibrium. Central banks use both quantitative and qualitative instruments to achieve these objectives. Quantitative instruments include open market operations, bank rate changes, and reserve requirement ratios. Qualitative instruments include credit rationing, margin requirements, and moral suasion. Recent trends in India's monetary policy include keeping the repo rate unchanged at 8% while reducing statutory liquidity ratio requirements.
Investment function
Investment can be defined and categorized in several ways. It includes the expenditure on real capital formation like new machines, buildings, and inventory. Investment can be autonomous or induced by income, private or public based on ownership, gross or net based on changes in capital stock, ex-ante or ex-post based on objectives, and categorized by propensity to invest. The marginal efficiency of capital and interest rate are key determinants of investment. Government policies aim to promote investment through measures like lowering interest rates, taxes, and increasing spending.
Inflation
Simple Explanation on Inflation. Consumer Price Index. Monetary & fiscal Policy. Inflation in India, Types of Inflation
Bain’s limit pricing model
The document discusses Bain's limit pricing model. It states that under Bain's model, oligopoly firms do not maximize profits in the short run due to fear of attracting potential new entrants. Instead, firms fix a price on the inelastic portion of the demand curve called the limit price, which is the highest price that deters new firm entry. The limit price allows existing firms to earn abnormal profits above competitive levels but below monopoly profits, maintaining market stability. Diagrams are included showing the limit price between the perfect competition and monopoly price points.
Unit 3 multiplier & super multiplier
The document discusses the Keynesian multiplier theory and the concept of the multiplier. It explains that the multiplier captures the cumulative effect of a change in investment on national income through induced consumption. The value of the multiplier depends on the marginal propensity to consume (MPC) and is determined as 1/(1-MPC). The document provides an example of the multiplier process showing how an initial investment leads to increasing rounds of consumption and income. It also discusses some assumptions and limitations of the multiplier model.
Baumol's model of demand for money
The Baumol model describes money demand as a tradeoff between liquidity and interest rate returns. It assumes consumers can keep income as cash or in savings accounts. Cash earns no interest while savings accounts pay interest i, the opportunity cost of holding cash. Consumers minimize costs by choosing the optimal number of trips N to the bank to withdraw cash. Their average money holdings is Y/2N. The Baumol-Tobin money demand function shows real money demand depends positively on income and withdrawal costs, and negatively on the interest rate.
Tobin’s q theory
Tobin's q theory is a ratio that compares the market value of a company to the replacement cost of its assets. A ratio below 1 implies the stock is undervalued, while above 1 means it is overvalued. This ratio is used to inform investment decisions. It is calculated by dividing a firm's market value by the book value of its assets. While Tobin's q theory was shown to predict investment in 1960-1974, later data showed the ratio and investment diverging, calling into question how accurately it forecasts capital expenditures.
Market structure oligopoly
- Oligopoly is characterized by a few large sellers that dominate a market. The decisions of each seller impact and are impacted by competitors.
- Under the Cournot model, two sellers of homogeneous products will each produce 1/3 of total market output and charge the same price to reach an equilibrium.
- The kinked demand curve model explains price rigidity in oligopolies. Each firm believes rivals will match price cuts but not increases, giving the demand curve a "kink" where it is inelastic below and elastic above the prevailing price. This removes incentives for firms to change prices.
What's hot (20)
The theory of multiplier and acceleration principle chapter 3
The theory of multiplier and acceleration principle chapter 3
Viewers also liked
investment function presentation
This document discusses various concepts related to investment in economics. It defines real investment as expenditure that enhances production capacity, such as spending on plant and machinery. It also defines financial investment, induced and autonomous investment, private and public investment, gross and net investment, voluntary and involuntary investment. The document discusses factors that influence investment decisions like the marginal efficiency of capital and interest rates. It outlines different government policies that can be used to encourage investment, such as reducing interest rates, taxes, or using deficit financing. Overall, the document provides an overview of key investment-related terms and concepts in economics.
Consumption And Investment Function
This document provides information on consumption, investment, and savings functions. It defines consumption as the use of goods and services by households. Investment is expenditures on capital goods for future income generation. Savings are disposable income left over after consumption expenditures. The document discusses consumption and investment functions, which relate these variables to income. It also outlines factors that determine consumption, investment, and savings like income, interest rates, and expectations. The document concludes with a case study comparing consumption functions in India and Iran.
The investment function
The document discusses different types of investment. Autonomous investment does not change with income levels and is focused on infrastructure like roads and public projects. Induced investment is impacted by changes in income levels and includes investments in fixed capital and inventories. The key determinants of investment are the marginal efficiency of capital, technological progress, demand forecasts, income levels, population growth, government policy, and political stability. Higher values of these factors will lead to more investment.
Consumption function
The document discusses the consumption function, which models the relationship between total consumption and national income. Consumption is defined as an increasing function of income. The average propensity to consume (APC) is the ratio of consumption to income and declines as income rises. The marginal propensity to consume (MPC) is the change in consumption from a change in income and is assumed to be positive but less than 1. Keynes' psychological law of consumption states that consumption increases less than proportionately to increases in income. Determinants of consumption include subjective psychological factors as well as objective factors like wages, fiscal policy, and interest rates. Theories like Duesenberry's relative income hypothesis model consumption as interdependent and influenced by social
Investment
The document discusses the concepts of investment, autonomous investment, and induced investment. It states that real investment refers to additions to physical capital like buildings and equipment that increase national income and employment. Autonomous investment does not depend on income levels and is typically done by governments for infrastructure. Induced investment varies with income levels as higher incomes lead to more consumption requiring more investment in capital goods. The multiplier effect is explained as additional rounds of spending and income increases triggered by any initial investment expenditure.
Chapter 3 -consumption and investment for BBA
Consumption and investment are the two components of aggregate demand in a simple two-sector macroeconomic model that assumes no government or foreign trade. Consumption is determined by disposable income and other factors, while savings is the portion of disposable income not consumed. The marginal propensity to consume measures how consumption changes with income, and is between 0 and 1. Determinants of consumption and savings include income, interest rates, prices, wealth, and demographic factors.
Consumption, Saving and Investment
Consumption refers to the final purchase of goods and services by individuals. It is an important economic concept that helps determine economic growth. Consumption is affected by factors like income, prices, taxes, and savings.
Keynesian theory states that current real income is the most important determinant of short-term consumption. Savings means consuming less now to consume more later. It differs from investment, which economists define as additions to real capital assets. There are various types of savings like personal savings and national savings.
Investment refers to committing money or acquiring property to generate future income. Traditional investments include assets like bonds, real estate and shares. Alternative investments comprise things like hedge funds and commodities. Investment decisions consider the expected
Presentation
The document discusses developing a decision support tool to aid in selecting target countries for investment promotion. Currently, country selection is based on assumptions and intuition rather than scientific methods. The objectives are to 1) review literature on investment promotion, 2) design a computer-based tool for selecting countries, 3) implement the designed tool, and 4) validate and test the tool. Literature suggests investment decisions involve vast information and risk, so a decision support system could help investors by combining technologies to manage information and aid decision-making.
The Level of Investment
This document discusses concepts related to investment and savings. It defines investment as spending on plants, machinery, buildings, and inventories by firms to produce goods and services. It notes that investment expenditure comes from accumulated savings rather than current income. It also discusses the relationship between investment, capital stock, and output over time. Investment increases capital stock and future output, while depreciation decreases them. The document also defines savings as the unspent portion of income intended for future use, and examines the relationship between savings and investment equilibrium.
New Chapter of Investment Promotion (English)
Presented by Ms. Hirunya Suchinai, Secretary General of Thailand Board of Investment, in "Opportunity Thailand" seminar on February 15, 2017
Insurance Sector Development & Economic Growth in Malaysia
To investigate the link between the insurance sector development and economic growth of Malaysia and to fill a gap in the current finance-growth nexus.
Research Based.
Trends and practices in investment promotion
This presentation describes the OECD's work on investment promotion with a particular focus on how it can be used by Chile to develop its investment promotion strategy.
It was presented in September 2015 to the high-level commission in Chile which is driving the reform of the country's investment promotion strategy.
To find out more visit www.oecd.org/investment
Industrial policy
The document outlines India's industrial policies since independence. Key policies include the Industrial Policy Resolution of 1948 which accepted a mixed economy with government monopoly in select industries. The 1956 policy emphasized heavy industries and expanding the public sector. The 1973 policy gave preference to small and medium enterprises. The 1980 policy promoted competition and 1991 policy deregulated industry, allowed private sector flexibility, and reduced licensing/controls.
Keynes
Keynes theory focuses on consumption as the primary driver of income. He proposed several consumption functions including the marginal propensity to consume, arguing that consumption increases but not as much as increases in income. Later economists developed related hypotheses like the permanent income hypothesis and life cycle hypothesis.
The consumption function is important as it invalidates Say's law and allows Keynes to develop the multiplier effect showing how an initial change in spending can have a larger impact on overall output and income.
The IS-LM model developed by Hicks graphically represents the relationship between interest rates, investment and savings (IS curve) and money supply and demand (LM curve) to determine equilibrium income and output levels. Fiscal and monetary policy can
Consumption function
Spending in the economy comes from four main sectors: consumers, business firms, government, and international trade. Consumer spending, also called consumption expenditure, is the largest component of aggregate demand and includes spending on durable goods, nondurable goods, and services. The consumption function shows that as income increases, consumer spending also increases, but at a decreasing rate. Key factors that influence consumer spending include wealth, expectations about future income, debt levels, real interest rates, and taxes.
Multiplier analysis
The document defines the investment multiplier as the ratio of change in national income due to a change in investment. It explains that an initial increase in investment can lead to an even greater increase in national income through subsequent rounds of spending. The multiplier effect is dependent on the marginal propensity to consume. The document also outlines the assumptions, workings, and limitations of the multiplier model.
Monetary policy
Monetary policy aims to control money supply and interest rates to achieve objectives like price stability and economic growth. In India, the Reserve Bank of India implements monetary policy through tools like open market operations, cash reserve ratio, statutory liquidity ratio, and bank rate policy. The objectives of monetary policy include price stability, controlled expansion of bank credit, and promotion of exports. However, monetary policy faces limitations like time lags, difficulties in forecasting, and the growth of non-banking financial institutions.
ppt on Industrial policy
The industrial policy of a country aims to encourage development of the manufacturing sector and other parts of the economy. Major objectives of India's industrial policy include rapid industrial development, balanced growth across industries, preventing concentration of economic power, and balanced regional development. The industrial policy has evolved over time through various resolutions and statements starting in 1948, with recent policies in 1991 focusing on liberalization, enhancing small businesses, and making industries more competitive.
Promotion mix"methods of promotion"
Presentation on promotion mix its method and new methods adopted by business and importance of social media in promotion
Investment banking
Investment banking assists companies and governments in raising capital through activities like underwriting securities and advising on mergers and acquisitions. It plays an important role in capital market intermediation by helping move funds from investors to issuers. In India, investment banking encompasses merchant banking and a range of other services. It has evolved a heterogeneous structure to meet regulatory requirements and provide different services like advisory, asset management, and secondary market activities.
Viewers also liked (20)
Insurance Sector Development & Economic Growth in Malaysia
Insurance Sector Development & Economic Growth in Malaysia
Similar to 6 investment and_investment_function
costofcapital-unitii-21051602kghkghkjjkkjj1224.pptx
This document discusses the cost of capital. It defines cost of capital as the minimum rate of return that a firm must earn on its investments to maintain its value. Cost of capital has several components, including the return at zero risk level and premiums for business risk and financial risk. The document also covers the classification, computation, and importance of cost of capital. It provides formulas for calculating the costs of different sources of capital like debt, preference shares, equity, and retained earnings. It concludes with the weighted average cost of capital formula.
Cost of capital
This document discusses the cost of capital. It defines cost of capital as the minimum rate of return that a firm must earn on its investments to maintain its value. Cost of capital has several components, including the return at zero risk, and premiums for business risk and financial risk. The document also discusses the different types of capital like debt, equity and retained earnings, and how to compute the cost of each. It explains weighted average cost of capital is calculated by weighting the costs of different sources of capital by their proportions.
Cost of Capital Calculation and introduction.pptx
This document discusses the calculation and components of the cost of capital. It defines cost of capital as the minimum rate of return required by a company to maintain the value of its stock. The document outlines the short-term and long-term financial requirements of businesses. It also discusses the various sources of financing including shares, debentures, retained earnings, and loans. The components of cost of capital including the return at zero risk level, premium for business risk, and premium for financial risk are defined. Methods for calculating the cost of specific sources such as debt, preference shares, equity, and retained earnings are presented.
(103) EABD - Unit 5.pptx
This document summarizes key concepts related to consumption functions, investment functions, and business cycles. It defines consumption and investment functions, explaining factors like disposable income, autonomous consumption, and marginal propensity to consume in consumption functions. It also discusses induced and autonomous investment, the marginal efficiency of capital, and determinants of investment levels. The document then explains concepts like the multiplier, accelerator, phases of the business cycle, and theories of the business cycle like monetary, innovation, and Keynesian theories.
Investment function.pptx
The document discusses the meaning and classification of investment, the determinants that influence investment including income level, interest rates, and demand forecasts, and the sources of investment such as private individuals seeking profit and government investment aimed at economic development and public welfare. Key factors that impact investment are discussed like the marginal efficiency of capital, interest rates, availability of financing, and government policies aimed at stimulating investment.
Cost of capital
- Cost of capital is the minimum rate of return that a company must earn on its investments to maintain its market value and attract funds. It represents the weighted average cost of all sources of financing, including equity, debt, preferred stock, and retained earnings.
- The cost of capital is used to evaluate capital projects and determine if their expected returns are adequate. It is also used to assess the company's capital structure and evaluate financial performance.
- Cost of capital is calculated by determining the costs of individual sources of financing weighted by their proportions of total capital. This provides the overall weighted average cost of capital for the firm.
Case Econ08 Ppt 11
This document provides an overview of capital, investment, and the capital market. It defines capital as goods used to produce other goods and services over time. It distinguishes different types of capital and discusses investment, depreciation, and the role of financial markets in facilitating the flow of savings from households to firms seeking capital. The capital market allows households' savings to be channeled to the most profitable investment opportunities through interest rates and returns on stocks and bonds. Firms evaluate potential investments by comparing their expected rates of return to market interest rates.
Input Demand: The Capital Market and the Investment Decision
The document discusses capital markets and the investment decision process. It defines different types of capital including physical, social, intangible, and human capital. It then discusses how the capital market links household savings to business investment. Firms evaluate potential investment projects based on their expected rates of return, costs, and the opportunity cost of funds in financial markets. A profit-maximizing firm will invest in projects until the expected return equals the market interest rate.
The Capital Market and the Investment Decision
The document discusses capital markets and the investment decision process. It defines different types of capital including physical, social, intangible, and human capital. It then discusses how the capital market links household savings to business investment. Firms evaluate potential investment projects based on their expected rates of return, costs, and the opportunity cost of funds in financial markets. A profit-maximizing firm will invest in projects until the expected return equals the market interest rate.
Ch10
The document discusses capital markets and the investment decision process. It defines different types of capital including physical, social, intangible, and human capital. It then discusses how the capital market links household savings to business investment. Firms evaluate potential investment projects based on their expected rates of return, costs, and the opportunity cost of funds in financial markets. A profit-maximizing firm will invest in projects until the expected return equals the market interest rate.
Unit 3 Cost of capital JNTUA Syllabus_Financial Management
The main types of dividends are cash dividends which are payments made to shareholders in cash, bonus shares which increase the number of shares held, and special dividends which are additional non-recurring payments over regular dividends usually due to abnormal profits. Dividends can also be interim dividends paid during the year or annual dividends paid once a year. Regular cash dividends refer to the expected annual dividend payments a company aims to maintain.
Cost of Capital Theory
This document discusses the cost of capital and its components. It defines cost of capital as the minimum rate of return a firm must earn on its investments to maintain its market value and earnings per share. There are three components to cost of capital: the zero risk return, premium for business risk, and premium for financial risk. Cost of capital can be calculated using an equation that adds these three components. The document also discusses different types of cost of capital such as marginal vs average cost, explicit vs implicit cost, future vs historical cost, specific vs combined cost, and spot vs normal cost. Methods for calculating cost of capital include computing the specific cost of each source of funds and the composite or weighted average cost of capital.
Return and risks ppt @ bec doms on finance
The document discusses key concepts related to investment returns and risks. It defines return as the level of profit from an investment, including current income and capital gains or losses. Key factors that influence returns are the type of investment, risks, and external economic and political forces. The time value of money is important in measuring returns, as is calculating required, real, and risk-free returns. Risks to investments include business, interest rate, currency exchange, tax, market, and event risks. Risk is evaluated at both the single asset and portfolio levels.
Jamal Adams Economics finance presentation 2010 2011
The document discusses various topics related to investing, including:
1) Compound interest and how it allows investments to grow exponentially over time through reinvestment of interest.
2) The three main asset classes - equities, fixed income, and cash equivalents - and how proper allocation between them can optimize returns while minimizing risk.
3) Different types of investments including stocks, bonds, mutual funds and their basic characteristics. Key factors like earnings, price-earnings ratios, and yields are discussed for evaluating investments.
Revision materials cf mba wic
This document discusses capital budgeting and the capital budgeting process. It covers key steps like generating investment ideas, analyzing proposals using techniques like net present value, internal rate of return, and payback period. It also discusses types of capital projects, rules of analysis, and definitions. The second half covers cost of capital, including costs of equity, debt, and preferred stock. It provides examples of calculating these costs and weighted average cost of capital (WACC), which weights the costs based on the firm's target capital structure.
Cost of capital akp ppt
Cost of capital is the minimum rate of return that a company must earn on its investments to maintain its market value and attract funds. It is used to evaluate investment projects and determine the company's capital structure. Cost of capital can be calculated for specific sources like equity, debt, preference shares, and retained earnings using various methods. The overall cost of capital is the weighted average of the costs of each source based on their proportion in the company's capital structure. It is an important concept in financial management for capital budgeting, valuation, and performance evaluation.
Chapter 5 cost of capital sml 401 btech
The document discusses the concept of cost of capital. It defines cost of capital as the minimum rate of return that a company must earn on an investment to make that project worthwhile. It then discusses different methods to calculate the cost of various components of capital, including:
1. Cost of equity can be calculated using the dividend valuation model or capital asset pricing model.
2. Cost of preference shares is the annual dividend divided by the issue price.
3. Cost of debt is the after-tax interest rate on bonds or loans.
The document provides examples of calculating each of these costs and compares the dividend valuation model to CAPM. It emphasizes that the cost of capital incorporates the risk and return considerations for
Finanacial anaylsis
The document analyzes the financial viability of a housing investment scheme for government officers. It presents a 34-year cash flow statement showing annual rental income from a government-provided house increasing by 10% every 5 years. The net present value is calculated using a 4.2% discount rate. The analysis determines that over the 34-year period, the total rental income of PKR 9.4 million is more than enough for an officer to purchase a house, demonstrating the scheme is financially sound.
Cost of capital
This presentation is an overview Cost of Capital.
Dr. Soheli Ghose ( Ph.D (University of Calcutta), M.Phil, M.Com, M.B.A., NET (JRF), B. Ed).
Assistant Professor, Department of Commerce,St. Xavier's College, Kolkata.
Guest Faculty, M.B.A. Finance, University of Calcutta, Kolkata
Similar to 6 investment and_investment_function (20)
costofcapital-unitii-21051602kghkghkjjkkjj1224.pptx
costofcapital-unitii-21051602kghkghkjjkkjj1224.pptx
Input Demand: The Capital Market and the Investment Decision
Input Demand: The Capital Market and the Investment Decision
Unit 3 Cost of capital JNTUA Syllabus_Financial Management
Unit 3 Cost of capital JNTUA Syllabus_Financial Management
UNIT III - SUM.pptxvdvdssddsgfgfdgfdhthtfhthtfhghbff
UNIT III - SUM.pptxvdvdssddsgfgfdgfdhthtfhthtfhghbff
Jamal Adams Economics finance presentation 2010 2011
Jamal Adams Economics finance presentation 2010 2011
More from domsr
performance of banks india
This document discusses the performance of banks in India. It provides an overview of key metrics used to evaluate banks, including the CAMELS framework which assesses capital adequacy, asset quality, management, earnings, liquidity, and sensitivity to market risk. The document then examines objectives and growth trends for scheduled commercial banks in India, including financial inclusion, deposits, investments, advances, capital adequacy, non-performing assets, financial intermediation, and returns. Challenges for the banking sector are also reviewed. Data charts are provided on various banking metrics and statistics.
Performance of banks in india 2011
The document discusses the performance of banks in India from 1980 to 2011. It notes that there were 80 scheduled commercial banks in India in 1980, with total deposits of Rs. 56,16,432 crores in 2010-11, representing 71% of India's GDP that year. Credit growth among financial sector entities was Rs. 49 trillion in 2010-11, representing 62% of India's GDP. The State Bank of India has a market capitalization of $20 billion, ranking it 49th in the world. The document uses metrics like the CAMELS framework to analyze trends in the Indian banking sector.
Uzbekistan Analysis
The document provides an overview of the labor market and labor laws in Uzbekistan. It notes that the government ministry oversees labor regulations and job markets. Most unions are state-run. While employees have rights established by law like minimum wage and pensions, there is no specialized labor arbitration system. The labor code establishes rights for workers but there are no independent workers organizations. Uzbekistan has ratified several ILO conventions around forced labor, working hours, holidays and other rights.
Switzerland Analysis
The document provides information about Switzerland across several topics. It includes statistics about Switzerland's land, labor force, education system, healthcare system, taxation, banking and finance, intellectual property laws, and competition laws. Switzerland has a highly skilled labor force, universal healthcare coverage, and strong intellectual property protection. Its banking sector, stock exchange, and insurance industry are major contributors to the economy.
Main
Brazil is a major agricultural producer, accounting for 19% of the world's arable land. Agriculture makes up 5.8% of GDP. Brazil is the world's largest producer of sugarcane, coffee, and oranges. Major industries are textiles, chemicals, and vehicles. Exports include iron, soybeans, and aircraft. Relations with India have grown, with two-way trade reaching $3.12 billion in 2007. Brazil's GDP was $1.993 trillion in 2008, with services making up 65.3% of the economy. The report analyzes Brazil's progress on basic requirements like education and healthcare, as well as efficiency and technological readiness.
Brazil country analysis report [team 2]
This document analyzes Brazil's standing as an investment destination by evaluating its progress in basic requirements, efficiency enhancers, and technological readiness. Regarding basic healthcare and education requirements, Brazil has a two-tiered public and private healthcare system and has experienced improvements in health indicators like life expectancy and reduced infant mortality in recent decades. However, poor health still reduces worker productivity and earnings. Overall the analysis evaluates where Brazil excels and needs improvement across various factors important for competitiveness.
Time value of money
The document discusses various time value of money concepts including future value, present value, perpetuities, and annuities. It provides examples of calculations for future and present value of a single sum, as well as present value calculations for perpetuities and annuities. Uneven cash flows are discussed as being the sum of present values of regular cash flows. Key steps in solving time value problems are identified as drawing the timeline, identifying the cash flows, determining what value is being calculated, and using the appropriate formula.
Supply
The document discusses supply and demand equilibrium in markets. It defines the law of supply, individual versus market supply, and short-run versus long-run supply curves. It also discusses the determinants of supply curves and how shifts in supply curves occur due to changes in these determinants. The key factors that determine equilibrium price and quantity in a market are the intersection of supply and demand. Shifts in either supply or demand curves will result in a new equilibrium price and quantity.
Structure
The document discusses different market structures and how they influence firm behavior with respect to pricing, supply, and barriers to entry. It describes the key characteristics and examples of perfect competition, monopolistic competition, oligopoly, duopoly, and monopoly market structures. Perfect competition is defined by free entry and exit, homogeneous products, many buyers and sellers, and price-taking firms. Monopolistic competition features product differentiation and relatively free entry/exit. Oligopoly is dominated by a small number of large firms, and examples include supermarkets and oil industries. Monopoly grants a single firm control over price and supply in an industry.
Report
The document discusses intellectual property rights in Switzerland. It began with opposition from Swiss cantons in the early 19th century due to profitable trade in unlicensed works. The first national copyright law was passed in 1883. Reasons for intellectual property rights include maintaining peace, assigning decision rights over assets, rewarding investment, and favoring information diffusion. Copyright protects works like literature, art, music and grants exclusive rights over reproduction and distribution. Copyright protection lasts 70 years after the author's death, while related rights last 50 years. Patents protect technical inventions for up to 20 years. Trademarks distinguish goods and services and can be renewed indefinitely. Counterfeiting harms finances, jobs and consumer safety. The 2008 copyright law expanded on
Pricecontrol
Price controls refer to legal restrictions on how high or low market prices can go, and include both price ceilings (maximum prices) and price floors (minimum prices). While price controls are intended to protect consumers during crises or emergencies, they often lead to inefficiencies such as shortages, wasted resources, lower quality goods, and black markets. Common rationales for price controls include helping certain groups, but they demonstrate a lack of understanding of how supply and demand determine market prices.
Perfectcompetition
The document discusses the model of perfect competition. It begins by outlining the key assumptions of perfect competition including many small firms, homogeneous products, perfect information, and barriers to entry or exit. It then provides examples of markets that approximate perfect competition such as agricultural markets. The document explains how under perfect competition firms are price takers in both the short run and long run and how price and output are determined. It concludes by discussing how perfect competition leads to productive, allocative, and dynamic efficiency.
National income
The document discusses various concepts related to national income such as GDP, NDP, NNP, per capita income. It provides estimates of these figures for India from 1999-2000 to 2004-2005 at both current and constant prices. It also explains key terms like domestic territory, normal residents, stock and flow variables, closed and open economies, and methods of measuring national income such as the product, income and expenditure methods.
National income & related concepts
The document discusses key concepts related to measuring national income in India such as GDP, NDP, NNP, and per capita income. It provides details on how the Central Statistical Organization of India estimates these aggregates using methods like product, income, and expenditure to measure economic activity at both current and constant prices. It also outlines the evolution of base years used in the national accounts statistics from 1948-49 to the latest base year of 1999-2000 in the new series of estimates.
Price Control
The document discusses governmental imposition of price controls through price ceilings and price floors and their effects on market equilibrium. [1] A price ceiling sets a maximum price that can be charged for a good and often results in a shortage if set below equilibrium price. [2] A price floor sets a minimum price and often leads to a surplus if set above equilibrium price. [3] Both price ceilings and floors can introduce inefficiencies in the market allocation of goods and resources.
Gdp+deflator+vs+cpi
GDP deflator and CPI are both used to measure inflation in an economy. GDP deflator measures the price changes of all goods and services produced in the economy, while CPI measures the price changes of goods and services purchased by households. CPI is more focused on consumer prices and assigns fixed weights to goods, so it can overstate inflation, while GDP deflator assigns changing weights and may understate inflation. Both measures generally agree on the overall inflation trend, but may diverge in specific cases like a crop failure, which would impact CPI more than GDP deflator.
Foreign exchange
Foreign exchange refers to foreign currencies and bank deposits denominated in foreign currency. The foreign exchange market allows people to trade one currency for another. The exchange rate between two countries is the price at which their residents trade currencies. Nominal exchange rates are relative prices of currencies, while real exchange rates also account for differences in inflation between countries and the relative prices of goods. Purchasing power parity theory holds that identical goods should have the same price across locations after accounting for exchange rates. The Big Mac Index published by The Economist uses McDonald's Big Mac burgers to estimate real exchange rates between currencies based on purchasing power parity.
Economics intro
The document discusses various topics in economics including:
1) Definitions of economics from different economists such as Robbins, Marshall, and Keynes who see it as the study of scarce resources and human decision making.
2) Microeconomics focuses on individual units like households while macroeconomics studies aggregates like total output and employment.
3) Other concepts discussed include opportunity cost, production possibility curve, comparative advantage, and short/long run frameworks.
Demand analysis
Demand is defined as the quantity of a commodity that consumers are willing and able to purchase at a given price in a given time period. Demand can be categorized based on the nature of the commodity, time period, and relationship to other goods. Demand curves show the relationship between price and quantity demanded - as price increases, quantity demanded decreases. Exceptions to this law of demand include Giffen goods, Veblen goods, and inferior goods. Elasticity refers to the responsiveness of demand to price changes and is affected by availability of substitutes and amount of income available to spend.
Comp mono
Perfect competition is characterized by many small firms producing identical products with no barriers to entry or exit, perfect information, and price-taking behavior. Market price is determined by the intersection of total industry supply and demand. In the short run, firms maximize profits by producing where marginal revenue equals marginal cost. In long run equilibrium, firms earn only normal profits and produce where price equals minimum average total cost.
More from domsr (20)
Recently uploaded
The Impact of GST Payments on Loan Approvals
Understanding how timely GST payments influence a lender's decision to approve loans, this topic explores the correlation between GST compliance and creditworthiness. It highlights how consistent GST payments can enhance a business's financial credibility, potentially leading to higher chances of loan approval.
OAT_RI_Ep20 WeighingTheRisks_May24_Trade Wars.pptx
How will new technology fields affect economic trade?
Pensions and housing - Pensions PlayPen - 4 June 2024 v3 (1).pdf
Wayhome's analysis of the UK market and how pension schemes can help solve the problems it presents younger people
Solution Manual For Financial Accounting, 8th Canadian Edition 2024, by Libby...
Solution Manual For Financial Accounting, 8th Canadian Edition 2024, by Libby, Hodge, Verified Chapters 1 - 13, Complete Newest Version Solution Manual For Financial Accounting, 8th Canadian Edition by Libby, Hodge, Verified Chapters 1 - 13, Complete Newest Version Solution Manual For Financial Accounting 8th Canadian Edition Pdf Chapters Download Stuvia Solution Manual For Financial Accounting 8th Canadian Edition Ebook Download Stuvia Solution Manual For Financial Accounting 8th Canadian Edition Pdf Solution Manual For Financial Accounting 8th Canadian Edition Pdf Download Stuvia Financial Accounting 8th Canadian Edition Pdf Chapters Download Stuvia Financial Accounting 8th Canadian Edition Ebook Download Stuvia Financial Accounting 8th Canadian Edition Pdf Financial Accounting 8th Canadian Edition Pdf Download Stuvia
一比一原版(IC毕业证)帝国理工大学毕业证如何办理
IC毕业证文凭证书【微信95270640】一比一伪造帝国理工大学文凭@假冒IC毕业证成绩单+Q微信95270640办理IC学位证书@仿造IC毕业文凭证书@购买帝国理工大学毕业证成绩单IC真实使馆认证/真实留信认证回国人员证明
如果您是以下情况，我们都能竭诚为您解决实际问题：【公司采用定金+余款的付款流程，以最大化保障您的利益，让您放心无忧】
1、在校期间，因各种原因未能顺利毕业，拿不到官方毕业证+微信95270640
2、面对父母的压力，希望尽快拿到帝国理工大学帝国理工大学毕业证学历书；
3、不清楚流程以及材料该如何准备帝国理工大学帝国理工大学毕业证学历书；
4、回国时间很长，忘记办理；
5、回国马上就要找工作，办给用人单位看；
6、企事业单位必须要求办理的；
面向美国乔治城大学毕业留学生提供以下服务:
【★帝国理工大学帝国理工大学毕业证学历书毕业证、成绩单等全套材料，从防伪到印刷，从水印到钢印烫金，与学校100%相同】
【★真实使馆认证（留学人员回国证明），使馆存档可通过大使馆查询确认】
【★真实教育部认证，教育部存档，教育部留服网站可查】
【★真实留信认证，留信网入库存档，可查帝国理工大学帝国理工大学毕业证学历书】
我们从事工作十余年的有着丰富经验的业务顾问，熟悉海外各国大学的学制及教育体系，并且以挂科生解决毕业材料不全问题为基础，为客户量身定制1对1方案，未能毕业的回国留学生成功搭建回国顺利发展所需的桥梁。我们一直努力以高品质的教育为起点，以诚信、专业、高效、创新作为一切的行动宗旨，始终把“诚信为主、质量为本、客户第一”作为我们全部工作的出发点和归宿点。同时为海内外留学生提供大学毕业证购买、补办成绩单及各类分数修改等服务；归国认证方面，提供《留信网入库》申请、《国外学历学位认证》申请以及真实学籍办理等服务，帮助众多莘莘学子实现了一个又一个梦想。
专业服务，请勿犹豫联系我
如果您真实毕业回国，对于学历认证无从下手，请联系我，我们免费帮您递交
诚招代理：本公司诚聘当地代理人员，如果你有业余时间，或者你有同学朋友需要，有兴趣就请联系我
你赢我赢，共创双赢
你做代理，可以帮助帝国理工大学同学朋友
你做代理，可以拯救帝国理工大学失足青年
你做代理，可以挽救帝国理工大学一个个人才
你做代理，你将是别人人生帝国理工大学的转折点
你做代理，可以改变自己，改变他人，给他人和自己一个机会美景更增添一份性感夹杂着一份纯洁的妖娆毫无违和感实在给人带来一份悠然幸福的心情如果说现在的审美已经断然拒绝了无声的话那么在树林间飞掠而过的小鸟叽叽咋咋的叫声是否就是这最后的点睛之笔悠然走在林间的小路上宁静与清香一丝丝的盛夏气息吸入身体昔日生活里的繁忙与焦躁早已淡然无存心中满是悠然清淡的芳菲身体不由的轻松脚步也感到无比的轻快走出这盘栾交错的小道眼前是连绵不绝的山峦浩荡天地间大自然毫无吝啬的展现它的达
1：1制作加拿大麦吉尔大学毕业证硕士学历证书原版一模一样
原版一模一样【微信：741003700 】【加拿大麦吉尔大学毕业证硕士学历证书】【微信：741003700 】学位证，留信认证（真实可查，永久存档）offer、雅思、外壳等材料/诚信可靠,可直接看成品样本，帮您解决无法毕业带来的各种难题！外壳，原版制作，诚信可靠，可直接看成品样本。行业标杆！精益求精，诚心合作，真诚制作！多年品质 ,按需精细制作，24小时接单,全套进口原装设备。十五年致力于帮助留学生解决难题，包您满意。
本公司拥有海外各大学样板无数，能完美还原海外各大学 Bachelor Diploma degree, Master Degree Diploma
1:1完美还原海外各大学毕业材料上的工艺：水印，阴影底纹，钢印LOGO烫金烫银，LOGO烫金烫银复合重叠。文字图案浮雕、激光镭射、紫外荧光、温感、复印防伪等防伪工艺。材料咨询办理、认证咨询办理请加学历顾问Q/微741003700
留信网认证的作用:
1:该专业认证可证明留学生真实身份
2:同时对留学生所学专业登记给予评定
3:国家专业人才认证中心颁发入库证书
4:这个认证书并且可以归档倒地方
5:凡事获得留信网入网的信息将会逐步更新到个人身份内，将在公安局网内查询个人身份证信息后，同步读取人才网入库信息
6:个人职称评审加20分
7:个人信誉贷款加10分
8:在国家人才网主办的国家网络招聘大会中纳入资料，供国家高端企业选择人才
Does teamwork really matter? Looking beyond the job posting to understand lab...
Does teamwork really matter? Looking beyond the job posting to understand lab...Labour Market Information Council | Conseil de l’information sur le marché du travail
Vicinity Jobs’ data includes more than three million 2023 OJPs and thousands of skills. Most skills appear in less than 0.02% of job postings, so most postings rely on a small subset of commonly used terms, like teamwork.
Laura Adkins-Hackett, Economist, LMIC, and Sukriti Trehan, Data Scientist, LMIC, presented their research exploring trends in the skills listed in OJPs to develop a deeper understanding of in-demand skills. This research project uses pointwise mutual information and other methods to extract more information about common skills from the relationships between skills, occupations and regions.falcon-invoice-discounting-a-premier-investment-platform-for-superior-returns...
falcon-invoice-discounting-a-premier-investment-platform-for-superior-returns...Falcon Invoice Discounting
Falcon stands out as a top-tier P2P Invoice Discounting platform in India, bridging esteemed blue-chip companies and eager investors. Our goal is to transform the investment landscape in India by establishing a comprehensive destination for borrowers and investors with diverse profiles and needs, all while minimizing risk. What sets Falcon apart is the elimination of intermediaries such as commercial banks and depository institutions, allowing investors to enjoy higher yields.在线办理(GU毕业证书)美国贡萨加大学毕业证学历证书一模一样
学校原件一模一样【微信：741003700 】《(GU毕业证书)美国贡萨加大学毕业证学历证书》【微信：741003700 】学位证，留信认证（真实可查，永久存档）原件一模一样纸张工艺/offer、雅思、外壳等材料/诚信可靠,可直接看成品样本，帮您解决无法毕业带来的各种难题！外壳，原版制作，诚信可靠，可直接看成品样本。行业标杆！精益求精，诚心合作，真诚制作！多年品质 ,按需精细制作，24小时接单,全套进口原装设备。十五年致力于帮助留学生解决难题，包您满意。
本公司拥有海外各大学样板无数，能完美还原。
1:1完美还原海外各大学毕业材料上的工艺：水印，阴影底纹，钢印LOGO烫金烫银，LOGO烫金烫银复合重叠。文字图案浮雕、激光镭射、紫外荧光、温感、复印防伪等防伪工艺。材料咨询办理、认证咨询办理请加学历顾问Q/微741003700
【主营项目】
一.毕业证【q微741003700】成绩单、使馆认证、教育部认证、雅思托福成绩单、学生卡等！
二.真实使馆公证(即留学回国人员证明,不成功不收费)
三.真实教育部学历学位认证（教育部存档！教育部留服网站永久可查）
四.办理各国各大学文凭(一对一专业服务,可全程监控跟踪进度)
如果您处于以下几种情况：
◇在校期间，因各种原因未能顺利毕业……拿不到官方毕业证【q/微741003700】
◇面对父母的压力，希望尽快拿到；
◇不清楚认证流程以及材料该如何准备；
◇回国时间很长，忘记办理；
◇回国马上就要找工作，办给用人单位看；
◇企事业单位必须要求办理的
◇需要报考公务员、购买免税车、落转户口
◇申请留学生创业基金
留信网认证的作用:
1:该专业认证可证明留学生真实身份
2:同时对留学生所学专业登记给予评定
3:国家专业人才认证中心颁发入库证书
4:这个认证书并且可以归档倒地方
5:凡事获得留信网入网的信息将会逐步更新到个人身份内，将在公安局网内查询个人身份证信息后，同步读取人才网入库信息
6:个人职称评审加20分
7:个人信誉贷款加10分
8:在国家人才网主办的国家网络招聘大会中纳入资料，供国家高端企业选择人才
How Does CRISIL Evaluate Lenders in India for Credit Ratings
CRISIL evaluates lenders in India by analyzing financial performance, loan portfolio quality, risk management practices, capital adequacy, market position, and adherence to regulatory requirements. This comprehensive assessment ensures a thorough evaluation of creditworthiness and financial strength. Each criterion is meticulously examined to provide credible and reliable ratings.
1. Elemental Economics - Introduction to mining.pdf
After this first you should: Understand the nature of mining; have an awareness of the industry’s boundaries, corporate structure and size; appreciation the complex motivations and objectives of the industries’ various participants; know how mineral reserves are defined and estimated, and how they evolve over time.
Seminar: Gender Board Diversity through Ownership Networks
Seminar on gender diversity spillovers through ownership networks at FAME|GRAPE. Presenting novel research. Studies in economics and management using econometrics methods.
一比一原版美国新罕布什尔大学(unh)毕业证学历认证真实可查
永久可查学历认证【微信：A575476】【美国新罕布什尔大学(unh)毕业证成绩单Offer】【微信：A575476】（留信学历认证永久存档查询）采用学校原版纸张、特殊工艺完全按照原版一比一制作（包括：隐形水印，阴影底纹，钢印LOGO烫金烫银，LOGO烫金烫银复合重叠，文字图案浮雕，激光镭射，紫外荧光，温感，复印防伪）行业标杆！精益求精，诚心合作，真诚制作！多年品质 ,按需精细制作，24小时接单,全套进口原装设备，十五年致力于帮助留学生解决难题，业务范围有加拿大、英国、澳洲、韩国、美国、新加坡，新西兰等学历材料，包您满意。
【业务选择办理准则】
一、工作未确定，回国需先给父母、亲戚朋友看下文凭的情况，办理一份就读学校的毕业证【微信：A575476】文凭即可
二、回国进私企、外企、自己做生意的情况，这些单位是不查询毕业证真伪的，而且国内没有渠道去查询国外文凭的真假，也不需要提供真实教育部认证。鉴于此，办理一份毕业证【微信：A575476】即可
三、进国企，银行，事业单位，考公务员等等，这些单位是必需要提供真实教育部认证的，办理教育部认证所需资料众多且烦琐，所有材料您都必须提供原件，我们凭借丰富的经验，快捷的绿色通道帮您快速整合材料，让您少走弯路。
留信网认证的作用:
1:该专业认证可证明留学生真实身份
2:同时对留学生所学专业登记给予评定
3:国家专业人才认证中心颁发入库证书
4:这个认证书并且可以归档倒地方
5:凡事获得留信网入网的信息将会逐步更新到个人身份内，将在公安局网内查询个人身份证信息后，同步读取人才网入库信息
6:个人职称评审加20分
7:个人信誉贷款加10分
8:在国家人才网主办的国家网络招聘大会中纳入资料，供国家高端企业选择人才
→ 【关于价格问题（保证一手价格）
我们所定的价格是非常合理的，而且我们现在做得单子大多数都是代理和回头客户介绍的所以一般现在有新的单子 我给客户的都是第一手的代理价格，因为我想坦诚对待大家 不想跟大家在价格方面浪费时间
对于老客户或者被老客户介绍过来的朋友，我们都会适当给一些优惠。
选择实体注册公司办理，更放心，更安全！我们的承诺：可来公司面谈，可签订合同，会陪同客户一起到教育部认证窗口递交认证材料，客户在教育部官方认证查询网站查询到认证通过结果后付款，不成功不收费！
falcon-invoice-discounting-a-strategic-approach-to-optimize-investments
Falcon stands out as a top-tier P2P Invoice Discounting platform in India, bridging esteemed blue-chip companies and eager investors. Our goal is to transform the investment landscape in India by establishing a comprehensive destination for borrowers and investors with diverse profiles and needs, all while minimizing risk. What sets Falcon apart is the elimination of intermediaries such as commercial banks and depository institutions, allowing investors to enjoy higher yields.
Earn a passive income with prosocial investing
Invest in prosocial funds that earn you an income while improving the world
^%$Zone1:+971)581248768’][* Legit & Safe #Abortion #Pills #For #Sale In #Duba...
Whatsapp (+971581248768) Buy Abortion Pills In Dubai/ Qatar/Kuwait/Doha/Abu Dhabi/Alain/RAK City/Satwa/Al Ain/Abortion Pills For Sale In Qatar, Doha. Abu az Zuluf. Abu Thaylah. Ad Dawhah al Jadidah. Al Arish, Al Bida ash Sharqiyah, Al Ghanim, Al Ghuwariyah, Qatari, Abu Dhabi, Dubai.. WHATSAPP +971)581248768 Abortion Pills / Cytotec Tablets Available in Dubai, Sharjah, Abudhabi, Ajman, Alain, Fujeira, Ras Al Khaima, Umm Al Quwain., UAE, buy cytotec in Dubai– Where I can buy abortion pills in Dubai,+971582071918where I can buy abortion pills in Abudhabi +971)581248768 , where I can buy abortion pills in Sharjah,+97158207191 8where I can buy abortion pills in Ajman, +971)581248768 where I can buy abortion pills in Umm al Quwain +971)581248768 , where I can buy abortion pills in Fujairah +971)581248768 , where I can buy abortion pills in Ras al Khaimah +971)581248768 , where I can buy abortion pills in Alain+971)581248768 , where I can buy abortion pills in UAE +971)581248768 we are providing cytotec 200mg abortion pill in dubai, uae.Medication abortion offers an alternative to Surgical Abortion for women in the early weeks of pregnancy. Zone1:+971)581248768’][* Legit & Safe #Abortion #Pills #For #Sale In #Dubai Abu Dhabi Sharjah Deira Ajman Fujairah Ras Al Khaimah%^^%$Zone1:+971)581248768’][* Legit & Safe #Abortion #Pills #For #Sale In #Dubai Abu Dhabi Sharjah Deira Ajman Fujairah Ras Al Khaimah%^^%$Zone1:+971)581248768’][* Legit & Safe #Abortion #Pills #For #Sale In #Dubai Abu Dhabi Sharjah Deira Ajman Fujairah Ras Al Khaimah%^^%$Zone1:+971)581248768’][* Legit & Safe #Abortion #Pills #For #Sale In #Dubai Abu Dhabi Sharjah Deira Ajman Fujairah Ras Al Khaimah%^^%$Zone1:+971)581248768’][* Legit & Safe #Abortion #Pills #For #Sale In #Dubai Abu Dhabi Sharjah Deira Ajman Fujairah Ras Al Khaimah%^^%$Zone1:+971)581248768’][* Legit & Safe #Abortion #Pills #For #Sale In #Dubai Abu Dhabi Sharjah Deira Ajman Fujairah Ras Al Khaimah%^^%$Zone1:+971)581248768’][* Legit & Safe #Abortion #Pills #For #Sale In #Dubai Abu Dhabi Sharjah Deira Ajman Fujairah Ras Al Khaimah%^^%$Zone1:+971)581248768’][* Legit & Safe #Abortion #Pills #For #Sale In #Dubai Abu Dhabi Sharjah Deira Ajman Fujairah Ras Al Khaimah%^^%$Zone1:+971)581248768’][* Legit & Safe #Abortion #Pills #For #Sale In #Dubai Abu Dhabi Sharjah Deira Ajman Fujairah Ras Al Khaimah%^^%$Zone1:+971)581248768’][* Legit & Safe #Abortion #Pills #For #Sale In #Dubai Abu Dhabi Sharjah Deira Ajman Fujairah Ras Al Khaimah%^^%$Zone1:+971)581248768’][* Legit & Safe #Abortion #Pills #For #Sale In #Dubai Abu Dhabi Sharjah Deira Ajman Fujairah Ras Al Khaimah%^^%$Zone1:+971)581248768’][* Legit & Safe #Abortion #Pills #For #Sale In #Dubai Abu Dhabi Sharjah Deira Ajman Fujairah Ras Al Khaimah%^^%$Zone1:+971)581248768’][* Legit & Safe #Abortion #Pills #For #Sale In #Dubai Abu Dhabi Sharjah Deira Ajman Fujairah Ras Al Khaimah%^^%$Zone1:+971)581248768’][* Legit & Safe #Abortion #Pills #For #Sale In #Dubai Abu Dhabi Sharjah Deira Ajman
Tdasx: Unveiling the Trillion-Dollar Potential of Bitcoin DeFi
Tdasx: Unveiling the Trillion-Dollar Potential of Bitcoin DeFi
Recently uploaded (20)
OAT_RI_Ep20 WeighingTheRisks_May24_Trade Wars.pptx
OAT_RI_Ep20 WeighingTheRisks_May24_Trade Wars.pptx
Pensions and housing - Pensions PlayPen - 4 June 2024 v3 (1).pdf
Pensions and housing - Pensions PlayPen - 4 June 2024 v3 (1).pdf
Solution Manual For Financial Accounting, 8th Canadian Edition 2024, by Libby...
Solution Manual For Financial Accounting, 8th Canadian Edition 2024, by Libby...
Does teamwork really matter? Looking beyond the job posting to understand lab...
Does teamwork really matter? Looking beyond the job posting to understand lab...
falcon-invoice-discounting-a-premier-investment-platform-for-superior-returns...
falcon-invoice-discounting-a-premier-investment-platform-for-superior-returns...
How Does CRISIL Evaluate Lenders in India for Credit Ratings
How Does CRISIL Evaluate Lenders in India for Credit Ratings
1. Elemental Economics - Introduction to mining.pdf
1. Elemental Economics - Introduction to mining.pdf
Seminar: Gender Board Diversity through Ownership Networks
Seminar: Gender Board Diversity through Ownership Networks
falcon-invoice-discounting-a-strategic-approach-to-optimize-investments
falcon-invoice-discounting-a-strategic-approach-to-optimize-investments
^%$Zone1:+971)581248768’][* Legit & Safe #Abortion #Pills #For #Sale In #Duba...
^%$Zone1:+971)581248768’][* Legit & Safe #Abortion #Pills #For #Sale In #Duba...
Tdasx: Unveiling the Trillion-Dollar Potential of Bitcoin DeFi
Tdasx: Unveiling the Trillion-Dollar Potential of Bitcoin DeFi
6 investment and_investment_function
- 2. Investment Net addition to the existing stock of capital assets E.g. new machines, factories and plants Does not refer to the purchase of existing bonds, securities, debentures, etc. Only real investment creates additional employment
- 3. Effective Demand ED = C + I Consumption function is more or less stable in the short-run Investment is the strategic variable for increasing employment
- 4. Characteristics of investment Most volatile component of GDP from demand / expenditure side Pro-cyclical Largely responsible for business cycles Major determinant of economic growth Dual role Aggregate demand Aggregate supply Self terminating and self financing
- 5. Components of investment Classified into three categories: Fixed non-residential investment Inventory investment Fixed residential investments
- 7. Business fixed investment Production requires factories & equipment – firms must invest in order to produce Increased production requires increased investment in fixed assets unless they have idle capacity Firms tend to invest more when labour cost relative to capital rental goes up To emphasize innovations Rental firms invest as they are in the business of renting out these assets to production firms
- 8. Investment in inventories Production Smoothing Factor of production Stock-out avoidance Work-in-progress
- 9. Fixed Residential Investment It is undertaken by households to own and live in their own houses Landlords invest as they are in the house- renting business.
- 10. Investment and Capital While investment is a flow, capital is a stock Capital is cumulative net investment: t Kt = Σ Ii i=1 where Kt = capital at time t Ii = net investment made during time period i.
- 11. Net investment = gross investment – depreciation Capital is measured at a point of time Point to note: If it is measured at the beginning of the period, it does not include investment made in that period If it is measured at the end of the period, it is inclusive of current investment
- 13. Public investment Investment is autonomous Quite arbitrary, i.e. without reference to market conditions (MEC or rate of interest)
- 14. Private investment Investment made by the private investors – households or firms Investment depends on market conditions High during prosperity Low during recession / depression
- 16. Volume of investment Depends upon two factors: Marginal efficiency of capital (MEC) Rate of interest
- 17. Rate of interest does not change much – sticky or constant MEC determines the volume of investment in a community Fluctuations in investment are mainly due to fluctuations in MEC
- 18. MEC The expected profitability of a capital asset Definition: Highest rate of return over cost expected from the marginal or additional unit of the capital asset Refers to Marginal unit Cost has to be deducted from returns
- 19. Two factors determine MEC Prospective yield from capital asset Supply price of capital asset
- 20. Prospective Yield of Capital Total net returns expected from the asset over its lifetime. ‘net’ means gross proceeds minus the ‘running costs’ of the asset Add together the annual net returns expected from the asset during its lifetime.
- 21. Points to note…… reference here is not to the actual but to the expected annual returns from the asset. the asset is not to be considered in the sense of existing asset but in the sense of a brand new asset. all prospective net annual returns from an asset (during its lifetime) may not be equal, unless we assume the existence of a stationary or static society.
- 22. Supply price Supply price is the cost of producing a brand new asset of that kind, not the supply price of an existing asset. The supply price of an asset is also referred to as its replacement cost.
- 23. Determining MEC Relating the two factors – prospective yield and supply price – gives MEC of an asset. The MEC of an asset thus, means what an investor expects to earn from an additional unit of it compared with what it costs him.
- 24. Supply price = discounted prospective yield R1 R2 Rn Cr = -------- + --------- + ------+ --------- (1+r) (1+r)2 (1+r)n Where Cr = supply price of new capital asset R1, R2 ---- = expected annual returns r = rate of discount which makes present value of the series of annual returns equal to the supply price
- 25. Rate of Interest Price paid for loanable funds Determined by supply and demand for loanable funds
- 26. MEC & Rate of Interest Potential investor will weigh MEC on new investment with rate of interest MEC > rate of interest Investment will be made MEC = rate of interest Equilibrium investment
- 27. Supply Annual MEC Rate of Effect on Price Return Interest Investment Rs. Rs. 4% 4% Neutral 25,000 1,000 Rs. Rs. 5% 4% Favourable 25,000 1,000 Rs. Rs. 4% 5% Adverse 25,000 1,000
- 28. At a Glance Volume of Investment MEC Rate of Interest Supply Price Prospective Yield of Capital Demand for Funds Supply of Funds Sale of output Running costs
- 30. Short-run Factors Expected demand Costs and prices Propensity to consume Current state of expectation
- 31. Long-run Factors Rate of growth of population Development of new areas / markets Technological progress Productive capacity of existing capital equipment Rate of current investment
- 32. Investment Function Investment expenditure depends positively on the scale / financing / source variable and its yield, e.g. output is the scale variable, profitability the yield. Varies negatively with its cost, e.g. interest and depreciation rates.
- 33. I = f (Y, r, Q, FMP, F, T, BC, Y-1, K-1, µ) Where I = net investment Y = output / income r = rate of interest Q = Tobin’s Q FMP = fiscal and monetary policy F = financial constraints T = technology BC = business confidence Y-1 = output in previous year K-1 = stock of capital in previous year µ = other factors
- 34. Output / income: investment is derived demand - will vary positively with changes in income Interest rate: investment has negative relationship with interest rate
- 35. Tobin’s Q Nobel prize winning economist James Tobin Market value of installed capital Q = ------------------------------------------------ Replacement cost of installed capital Q > 1: invest in more capital Q < 1: investment will fall
- 36. Tax laws Corporate tax: levied on business profits (net of depreciation cost) Income tax: rules permit exemption on housing loans but not on rental income Other fiscal policies: capital subsidy, tax concessions/holidays