156x Filetype PPTX File size 0.09 MB Source: cms.gcg11.ac.in
CONTENTS: 1. Meaning 2. Classifications 3. Propensity 4. Determinants of Induced Investment 5. Investment Function 6. Measures to stimulate Private Investment 7. Sources of Public Investment 8. Importance of Investment 1. MEANING OF INVESTMENT The term Investment means purchasing of different kinds of shares and stocks and investing capital in such activities as are likely to yield income. According to keynes: The term Investment ,is used to mean real investment. It means addition made to the existing capital asset which results in an increase in employment. Thus, investment is the expenditure incurred for real capital formation. It includes 3 kinds of items: a) Building of new machines & capital equipments b) Construction of new buildings c) Increase in stocks. DEFINITIONS: - In words of KEYNS, “ Investment, thus defined included therefore the increment of capital equipment.” - According to Stonier and Hague, “By investment we do not mean the purchase of existing paper securities bonds, debentures or equities but the purchase of new factories, machines and the like.” 2. CLASSIFICATION OF INVESTMENT •2.1 Induced and Autonomous investment 1)Induced investment: It is governed by income & amount of profit. Induced by changes in income and profit. Induced investment is found in private sector. In words of prof. keiser,” When an increase in investment is due to increase in current level of income & production, it known as investment.” Induced investment is expressed in fig.1, income is shown on OX- axis & investment is shown on OY-axis. II curve represent induced investment. It slopes upward signifying that investment increases when there is increase in income. Y Induced I I investment N V E S T M E N T O X I INCOME Figure 1
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