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3. Types of Investment

Autonomous Investment: Investment that does not depend on income.

Induced Investment: Investment that depends on income and output.

Gross Investment: Includes depreciation.

Net Investment: Gross investment minus depreciation.

4- Applied Analysis of Investment

In macroeconomics, investment does not mean buying shares only. Investment refers to

spending on capital goods that help produce other goods and services. This section

explains investment using very simple numerical and practical examples suitable for
first-year students.

Simple Investment Function

⚫ . Investment in Measuring National Income

National Income = C + I + G + (X - M)

⚫ Determinants of Investment

Interest rate, expected profit, technology, and government policy.

⚫ Investment Function

I = I0 - br

⚫ Numerical Example

If I0 = 200, b = 20, r = 5

Investment = 100

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