Investment: General Issue

Abstract

To an economist, investment refers to net capital formation. Hence we can refer it to su::h capital expenditure on consumer durables, residential construction (buildings), plants a·1d machinery. Investment also covers the purchase of real tangible assets. These include machines, factories, and stock of raw materials. A broader consider'ation of investm c·nt involves the sacrifice of certain present values of consumption for fut ure value/consumption. Investment is one component of the Keynesian model of income determination. Investment is a component of aggregate spending. Investment fluctu a· es more than other components of national income. Investment indeed is the most dynan tic and erratic element of all macroeconomic aggregates. It is very difficult to formulate a model that can explain or predict the behaviour of investment with reasonable degree of accuracy