What are the differences between Autonomous Investment and Induced Investment?


Autonomous Investment; Induced Investment; Investment; Difference between Autonomous Investment and Induced Investment

What are the differences between Autonomous Investment and Induced Investment?

Autonomous Investment:


  • It refers to the investment not dependent on the current level of production or profit level.

  • It is not a continuous investment and can rise or fall at any time.

  • It is essential for nation in the initial stage of development and is useful to lift an economy out of depression.

  • It is generally made by the Government.

  • This type of investment is mainly done with the welfare motive.

  • These are profit and interest inelastic.


Induced Investment:

  • It refers to the investment that depends on the current level of production or profit level.

  • It is a continuous investment and changes in proportion to the output of goods.

  • It is essential for a nation to maintain its stability and is useful to keep the economy on the road to recovery and prosperity.

  • It is generally made by private sector and business concerns.

  • It is done with profit motive.

  • These are profit and interest elastic.


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