In ordinary sense investment means to buy shares, securities, stocks, etc. In an economic sense an investment is the purchases of goods that are not consumed today but are used in the future to generate more income or wealth. Hi friends, in today’s article we are going to know about the Difference between Autonomous investment and Induced investment. So let’s discuss in details.
Table of Contents
Difference between Autonomous investment and Induced investment
Investment expenditure which is affected by changes in the level of income, output, sales or profit is termed as induced investment.
On the other hand, Autonomous investment is independent of the level of income which is generally undertaken by government and public authorities.
Autonomous investment generally takes place in houses, roads, public undertakings and other types of economic infrastructure such as power, transport, communications, etc.
Induced investment is also called private investment because this type of investment generally done by private parties whose investment decisions directed by profit expectations.
Induced investment is shown in the below figure, where Id curve represents induced investment.
Induced investment varies directly with the change in national income and this is why the curve of Id is upward sloping.
Autonomous investment is shown in the following figure –
In the above figure, it can be seen that whatever the level of national income, autonomous investment remains constant at the level of Ia and so the curve of autonomous investment is a horizontal straight line.
FAQ
What is Investment?
In ordinary sense investment means to buy shares, securities, stocks, etc. In an economic sense an investment is the purchases of goods that are not consumed today but are used in the future to generate more income or wealth. As for example - LIC.
What is Induced Investment?
Investment expenditure which is affected by changes in the level of income, output, sales or profit is termed as induced investment.
What is Autonomous Investment?
Autonomous investment is independent of the level of income which is generally undertaken by government and public authorities.
Conclusion
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