This document discusses various investment concepts including:
1. Types of investments such as induced, autonomous, physical, financial and business assets.
2. Key determinants of investment including income, interest rates, Tobin's Q, and marginal efficiency of capital.
3. Multiplier effects including money, fiscal, and investment multipliers which measure the response of endogenous variables to exogenous changes.
4. The accelerator effect whereby growth in GDP encourages businesses to invest more in fixed assets like factories and machinery, further stimulating economic growth.
This theory relies on the market behaviour of the consumer to know about his preferences with regard to the various combinations for the two reactions and responses of the consumer.
In Macroeconomics Income and Employment are interchangeable terms, since in the short-run National income depends on the total volume of employment or economic activity in the country. As income and employment are synonymous the employment theory is also called income theory.
It should be clear to readers that the classical economists did not formulate any specific theory of employment as such. They only laid down certain postulates which subsequently developed as a theory.
This theory relies on the market behaviour of the consumer to know about his preferences with regard to the various combinations for the two reactions and responses of the consumer.
In Macroeconomics Income and Employment are interchangeable terms, since in the short-run National income depends on the total volume of employment or economic activity in the country. As income and employment are synonymous the employment theory is also called income theory.
It should be clear to readers that the classical economists did not formulate any specific theory of employment as such. They only laid down certain postulates which subsequently developed as a theory.
In monetary economics, the quantity theory of money (QTM) states that the general price level of goods and services is directly proportional to the amount of money in circulation, or money supply. The theory was challenged by Keynesian economics,but updated and reinvigorated by the monetarist school of economics. While mainstream economists agree that the quantity theory holds true in the long run, there is still disagreement about its applicability in the short run. Critics of the theory argue that money velocity is not stable and, in the short-run, prices are sticky, so the direct relationship between money supply and price level does not hold.
Alternative theories include the real bills doctrine and the more recent fiscal theory of the price level.
Investment Multiplier and Super multiplierKhemraj Subedi
Investment Multiplier and Super Multiplier are very important concept of Macroeconomics to understand the effect of autonomous investment and induced investment in final increase in national income.
In monetary economics, the quantity theory of money (QTM) states that the general price level of goods and services is directly proportional to the amount of money in circulation, or money supply. The theory was challenged by Keynesian economics,but updated and reinvigorated by the monetarist school of economics. While mainstream economists agree that the quantity theory holds true in the long run, there is still disagreement about its applicability in the short run. Critics of the theory argue that money velocity is not stable and, in the short-run, prices are sticky, so the direct relationship between money supply and price level does not hold.
Alternative theories include the real bills doctrine and the more recent fiscal theory of the price level.
Investment Multiplier and Super multiplierKhemraj Subedi
Investment Multiplier and Super Multiplier are very important concept of Macroeconomics to understand the effect of autonomous investment and induced investment in final increase in national income.
DESPITE SEVERAL GLOBAL DISTURBANCES, INDIA IS
DOING QUITE WELL AS COMPARED TO OTHER ECONOMIES
WHAT IS THEME BASED INVESTMENT
WHICH IS A BETTER STRATEGY ? BUY & HOLD
OR ACTIVE RE-BALANCING ?
FILE YOUR INCOME TAX RETURN
Market is back with a Bang !
Invest in right
product & sit
tight till your
investment
tenure
Earn up to 12% p.a. by Investing in Inventory
Finance Opportunity
STAY FIRM - INDIA IS DOING WELL!
Investing is not the same like before. Its not the Large-cap story alone. There is a large list of themes and wealth creating strategies in the world of Mutual Funds. Remain invested in the one which is most suitable to you and remain positive. The best is yet to come.
Read our monthly newsletter to manage your personal finance!
The monthly newsletter by seeman fiintouch LLP APRIL 2022Ashis Kumar Dey
STAY FIRM - INDIA IS DOING WELL
Trending MF Themes
Equity Market is at a pause – NIFTY &SENSEX is down by almost 2% from its 31st March closing.
What is the best method to create good wealth ?
Wallet4Wealth delivering you a monthly news letter to manage your personal finance. In our previous issue we discussed about India being in a Sweet Spot! Amidst current Global disturbances, FIIs are looking at India as a safe zone for investments; our stringent trade policies and huge consumer base is an unsaid attraction for every investor. Hence most of the investment experts are bullish about Indian equity market.
However the key thing to understand here is - where to invest? It looks promising but costly, Energy & Infra looks cheaper and attractive, large Cap is safe but unable to create enough alpha (returns)...... so a perfect Asset Allocation is must to be followed by every investor. Read more about some SMART Mutual Fund schemes or categories which provides easy maneuvering between the Assets, Sectors and Securities.....
If you want to give any feedback you can suggest us in the comment box. Also do like and share to motivate us so that we will provide you latest information in our next newsletter. For more update visit our website https://wallet4wealth.com/
Thank you.
Read| The latest issue of The Challenger is here! We are thrilled to announce that our school paper has qualified for the NATIONAL SCHOOLS PRESS CONFERENCE (NSPC) 2024. Thank you for your unwavering support and trust. Dive into the stories that made us stand out!
Synthetic Fiber Construction in lab .pptxPavel ( NSTU)
Synthetic fiber production is a fascinating and complex field that blends chemistry, engineering, and environmental science. By understanding these aspects, students can gain a comprehensive view of synthetic fiber production, its impact on society and the environment, and the potential for future innovations. Synthetic fibers play a crucial role in modern society, impacting various aspects of daily life, industry, and the environment. ynthetic fibers are integral to modern life, offering a range of benefits from cost-effectiveness and versatility to innovative applications and performance characteristics. While they pose environmental challenges, ongoing research and development aim to create more sustainable and eco-friendly alternatives. Understanding the importance of synthetic fibers helps in appreciating their role in the economy, industry, and daily life, while also emphasizing the need for sustainable practices and innovation.
Safalta Digital marketing institute in Noida, provide complete applications that encompass a huge range of virtual advertising and marketing additives, which includes search engine optimization, virtual communication advertising, pay-per-click on marketing, content material advertising, internet analytics, and greater. These university courses are designed for students who possess a comprehensive understanding of virtual marketing strategies and attributes.Safalta Digital Marketing Institute in Noida is a first choice for young individuals or students who are looking to start their careers in the field of digital advertising. The institute gives specialized courses designed and certification.
for beginners, providing thorough training in areas such as SEO, digital communication marketing, and PPC training in Noida. After finishing the program, students receive the certifications recognised by top different universitie, setting a strong foundation for a successful career in digital marketing.
Macroeconomics- Movie Location
This will be used as part of your Personal Professional Portfolio once graded.
Objective:
Prepare a presentation or a paper using research, basic comparative analysis, data organization and application of economic information. You will make an informed assessment of an economic climate outside of the United States to accomplish an entertainment industry objective.
Model Attribute Check Company Auto PropertyCeline George
In Odoo, the multi-company feature allows you to manage multiple companies within a single Odoo database instance. Each company can have its own configurations while still sharing common resources such as products, customers, and suppliers.
Introduction to AI for Nonprofits with Tapp NetworkTechSoup
Dive into the world of AI! Experts Jon Hill and Tareq Monaur will guide you through AI's role in enhancing nonprofit websites and basic marketing strategies, making it easy to understand and apply.
A Strategic Approach: GenAI in EducationPeter Windle
Artificial Intelligence (AI) technologies such as Generative AI, Image Generators and Large Language Models have had a dramatic impact on teaching, learning and assessment over the past 18 months. The most immediate threat AI posed was to Academic Integrity with Higher Education Institutes (HEIs) focusing their efforts on combating the use of GenAI in assessment. Guidelines were developed for staff and students, policies put in place too. Innovative educators have forged paths in the use of Generative AI for teaching, learning and assessments leading to pockets of transformation springing up across HEIs, often with little or no top-down guidance, support or direction.
This Gasta posits a strategic approach to integrating AI into HEIs to prepare staff, students and the curriculum for an evolving world and workplace. We will highlight the advantages of working with these technologies beyond the realm of teaching, learning and assessment by considering prompt engineering skills, industry impact, curriculum changes, and the need for staff upskilling. In contrast, not engaging strategically with Generative AI poses risks, including falling behind peers, missed opportunities and failing to ensure our graduates remain employable. The rapid evolution of AI technologies necessitates a proactive and strategic approach if we are to remain relevant.
2. Investment
• It is allocating money in the expectation of monetary benefit in the
future.
• Return : It is the benefit from an investment.
• Investments are done in Physical Assets, Financial Assets and Business
Assets.
• Types of investment
1. Induced Investment
2. Autonomous Investment
Raju Indukoori
3. Induced Investment
• Induced Investment : Influenced by returns or profits like
• Change in Asset prices
• Change in Income
• Low cost of borrowing
• Low wages
• Autonomous Investment:
Raju Indukoori
4. Autonomous Investments (Ia)
• It is not influenced by income or return expected. Governments do
this for public utility services.
• Irrespective of change (increases or decrease income) in income,
investment is done.
Raju Indukoori
Income (Y)
Investment I Ia
5. Investment Function
Investments and its determinants are important to know for a
person or company individually. But it is more important for
the governments in the macro economic scenario. Major
factors determining investments
1. Income (Y)
2. Real Interest rate
3. Tobin’s Q
4. Marginal Efficiency of Capital (MEC)
Raju Indukoori
6. Income
1. Increase in income stimulates investment and fall in income
dampens investment.
2. Regular income is more important than other income sources.
• For a salaried person increase or decrease in salary has more impact
than bonus, ESOP and incentives received.
• For a business man, profit is the regular income when compared to
income from sale of assets, interest received, dividends received
etc.
Raju Indukoori
7. Types of Income
Raju Indukoori
Monetary
1. Profits from doing business
2. Dividend received on shares and
mutual funds.
3. Interest received on term deposits,
bonds and debentures.
4. Capital gains on real assets and
financial assets.
5. Wind fall gains like Lottery, Ponzi
schemes, etc…
Manual
1.Salary from dong a job
2.Fee received for rendering professional
services
3.Brokerage or commission received for
intermediation
4. Awards and rewards for competitions,
TV Shows, etc.
9. Marginal Efficiency of Capital (MEC)
1. It is propounded J M Keynes.
2. It is the highest rate of return expected from an additional unit of a capital asset over
its cost.
3. It is the ratio of
i. Rate of return/s or yield/s of capital goods (y).
ii. Cost of capital (k).
4.Future value/s is/are discounted and equated to present value to know the
prospective rate of return.
5.Rate of return is compared with cost of capital (k) or cost of borrowings.
Raju Indukoori
10. Factors Influencing MEC
1. Capital equipment supply: influences demand supply gap.
2. Change in Income : Rise stimulates and fall dampens investments
3. Expectations: Short term and long term
4. Production methods or techniques: saves costs and improves returns.
5. Propensity to Consume : Increases demand for consumer goods
6. Uncertainty of expected returns
7. Government policy: Promotional measures like subsidies, tax holidays etc.
8. Nature of demand: Short lived, persisting in long run
9. Business cycles : Optimism and pessimism
Raju Indukoori
11. Tobin’s Q
1. It is the ratio between a physical asset's market value and its replacement value.
2. Initially it was known as Kaldor's V on the name of Nicholas Caldor introduced
this ratio in 1966.
3. James Tobin popularised this ratio and it is also known as Q ratio.
4. It was first introduced by Nicholas Kaldor in 1966 in his article "Marginal
Productivity and the Macro-Economic Theories of Distribution.
Raju Indukoori
13. Multiplier
• Macro economics uses multiplier to trace the relationship between two
variables and their impact on aggregate demand and income.
• Multiplier measures how much an endogenous variable changes in
response to a change in some exogenous variable.
• Multipliers are used in different contexts
• Money Multiplier : Central bankMoney supply
• Fiscal Multiplier
• Investment multiplier
Raju Indukoori
14. Money Multiplier (M)
• Banks create money, especially under the reserve ratio system with central bank.
Where money is created whenever a bank gives out a new loan.
• Central bank reserves indicate the size of deposits which further reflect size of
loans in the economy. This continues multiple times, and is called the multiplier
effect (M)
• This makes RBI reserves as an indicator for money supply and its multipier in
India
• For example every increase of one rupee with RBI reserves is seen as increase in
ten rupees of deposits with commercial banks, then the multiplier effect is 10.
Raju Indukoori
15. Fiscal Multiplier (F)
• This multiplier is used to assess the effects of fiscal policy, or other
exogenous changes in spending, tax rates, subsides, etc on aggregate
output or GDP.
• For example, if Indian government increases its spending for a year by
one rupee which results in GDP increase by Two rupees, then the fiscal
multiplier effect is 2.
• This is how governments do autonomous investments to attain desired
GDP growth rate.
Raju Indukoori
16. Investment Multiplier (K)
• J M Keynes gave the concept of multiplier in his theory of employment.
It is known as investment multiplier.
• It is the relationship between income and the rate of investment, given the
propensity to consume influencing aggregate employment.
• Multiplier tells us that, when there is an increment of investment, income
will increase by an amount which is K times the increment of investment.
Raju Indukoori
17. Investment Multiplier
K = ∆Y/∆I
∆Y = K * ∆I
Where
K = Multiplier
∆Y = Change in income
∆I = Change in Investment
Raju Indukoori
19. Accelerator
• F A Hayek popularised the accelerator effect.
• It is the positive effect of market or economic growth on private
fixed investments known as acceleration effect.
• The acceleration effect is the phenomenon that a variable moves
toward its desired value faster and faster with respect to time.
• It has reciprocating effect in the economy.
Raju Indukoori
20. How Accelerator Works?
1. Rising GDP implies growing businesses, increased sales, rising and
profits and greater use of existing capacity (fixed investments).
2. Accelerator implies that profit expectations and business confidence rise,
encouraging businesses to build more factories and other buildings and to
install more machinery through fixed investment.
3. This further leads to the growth of the economy through the stimulation
of consumer incomes and purchases through the multiplier effect.
Raju Indukoori