Answer to Question #50388 in Macroeconomics for abdulla sabit

Question

Mention the determinants of investment. Suppose,on July1,2008,the total stock of inventory of an economy was 5 billion dollars and the stock of inventory had become 10 million dollars at the end of June,2009. What was the inventory investment in that economy in FY 2008-2009?

Answer 1

The level of investment in an economy tends to vary by a greater extent than other components of aggregate demand. This is because the
underlying determinants also have a tendency to change.
The main determinants of investment are:
1) The expected return on the investment
2) Business confidence
3) Changes in national income
4) Interest rates
5) General expectations
6) Corporation tax
7) The level of savings
If on July1, 2008, the total stock of inventory of an economy was 5
billion dollars and the stock of inventory had become 10 million dollars
at the end of June, 2009, the inventory investment in that economy in
FY 2008-2009 was 0.2%.