12 Questions
What is the main focus of this chapter on investment?
The process of building up the capital stock and its impact on income and production
What is the primary source of investment spending according to the passage?
Accumulated savings and other external sources
What is the key distinction between physical investment and financial investment?
Physical investment increases the country's productive capacity, while financial investment only transfers the ownership of existing assets.
What is the purpose of discussing the relationship between demand and supply for investment?
To explore the interplay between investment factors and changes in the flow of income and production
What is the primary focus of the chapter's discussion on savings?
How savings can be channeled back into the circular flow as a source of investment spending
Which of the following best describes the overall structure of the chapter?
It starts with the definition of investment and then discusses the relationship between investment, savings, and the circular flow of income and production.
Why is investment essential for an economy?
It increases the capital stock and generates income inflows
What is the primary source of financing for investment?
Savings of the economy
Which of the following is NOT considered part of investment expenditure in national income analysis?
Private sector investment spending
What is the relationship between investment expenditure and aggregate demand?
Investment expenditure is a component of aggregate demand
Which of the following statements about investment expenditure is NOT true?
It is financed solely by current business income
What is the primary purpose of investment expenditure by the government?
To provide for social projects like roads, hospitals, and schools
Test your knowledge on the investment function, capital stock, expenditure, income, production, savings, and their impact on the circular flow in the economy. Explore the factors that can influence investment contributions to the circular flow.
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