Distinguish between autonomous and induced investment ?

Answer :

Autonomous investment is that type of investment which is not affected by change in the level of income or output .Therefore, it is income inelastic. However, autonomous investment may change in non – income factors like innovation of new techniques of production, discovery of new markets, growth of population, etc.

Induced investment, on the other hand, is that investment which is undertaken as a result of change in the level of income. It varies directly with the change in the level of income.

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Also read : Induced and Autonomous Investment