Economics · Macroeconomics
Consider the following statements about Autonomous and Induced Investment: I. Autonomous investment is independent of the level of income and interest rate; it is represented as a horizontal line. II. In the simple Keynesian model of income determination, investment is assumed to be autonomous. III. Induced investment varies positively with income (MPI = ΔI/ΔY = α > 0) and negatively with the rate of interest. IV. Autonomous investment depends on technology, government policy, innovations and population growth. Which of the above statements are CORRECT?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1II, III and IV✓
- 2I, II and IV only
- 3II and III only
- 4I and II only
Correct answer
II, III and IV
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