Investment spending is very significant because it is an essential ingredient in economic development and growth. The decrease in the level of investment spending may cause a recession. Most recessions occur as a result of fall in investment spending (Paul & Krugman, 2007). Swings in investment spending are very dramatic than those in customer spending. Reduction in consumer spending is normally a result of a progress that starts with a slump in investment spending. The most significant factors that determines investment spending are the rate of interest and anticipated future real GPD. To understand the kind of reasoning, first there is a need to note that planned investment spending is the investment spending that firms intend to pass through over a given period, in contrast to investment spending that happen but is not planned (William & Greene, 2008). Planned spending on investment projects is negatively the same as the interest rate. A higher interest rate leads to a small level of planned investment spending.
The aggregate demand and aggregate supply curves are the basic macroeconomic tools for studying output fluctuations and the determination of price level and the inflation rate. These tools are basically used to understand why the economy deviates from a path of a smooth growth over time and to explore the consequences of government policies intended these output fluctuations (Paul & Krugman, 2007).
The aggregate supply curve describes, for each given price level, the quantity of output firms are willing to supply. It is upward sloping because firms are willing to supply more output at higher prices. The aggregate demand curve on the other hand shows the combinations of the price level and the level of output at which the goods and money markets are simultaneously in equilibrium. (Froyen...
Investment Spending and Worker ProductivityThe economy of a country entails more than the sum of every individual�s economic status. In essence, a country�s economy is a collection of the transaction and values beyond a person�s actual cash in hand (Smyth, 2019). Investment spending and labor productivity are some of the factors that shape the economy of a country. An investment is a term used to refer to money or resources
Failing to contribute the maximum amount to this retirement plan is simply giving up on free money; by doubling his current contribution of three percent, Chris would actually be tripling the amount added to the 401(k) each year due to the employer's matching policy. This account is also earning an estimated eight percent annually, not far behind the 9.5% the stock market is expected to earn, and the money
By lowering interest rates, the government lowers the threshold of expected return for capital investments, thus making more investments economically viable. However, such supply side initiatives are weighed by firms against the potential income. If the economic outlook - that is to say the expected demand - is poor, such that the expected return will still not exceed the cost, then the investment will not be undertaken. In speaking with
This would play a role in helping to bring the Czech Republic into the EU in 2004. The effect that this would have on the Prague Stock Exchange is that it would cause it to rise to 1,940. At which point, it would have a severe down trend economy during 2008 and into 2009. The only difference is: that the various reforms and economic policies that the government was
Investment higher education important investment anticipating a national return.This relevant tool promoting economy eradicating poverty world. However, a huge problem taking consideration, inequality barriers colleges universities admission-based social demographic background. Investments in Higher Education The economic situation of most countries is in decline as a result of several environmental factors. The level of poverty is numerous countries has become a problem for these countries, but also for richer countries that must invest
However, it will depend upon the impact that rising prices will have on consumer spending and corporate balance sheets. Geopolitical tensions could have an impact upon the price of commodities most notably: oil and gold. As various uncertainties around the globe, could have an impact upon the availability of oil supplies, which will cause prices to increase. A good example of this can be seen with the different protests that
Our semester plans gives you unlimited, unrestricted access to our entire library of resources —writing tools, guides, example essays, tutorials, class notes, and more.
Get Started Now