Question

What is​ investment? What can cause the investment function to​ shift?

Answer 1

For understanding investment we need to to get the meaning of GDP

GDP is the production value of final goods and services that is produced within the domestic boundary of a country in a financial year

By expenditure method it is the sum of consumption, investment, government spending and net export

Where net export is the difference of export and import

So here we can see it see that one of the important terms in calculating the GDP is the investment

From the perspective of economics investment in simple terms is is the long term goal of acquiring any asset or income generating source that consumption will not be today but used in future to create more wealth

The example buying of bonds, investing in stock market, buying any real estate property

Some of the important determinants or shifters which causes the shift of investment are are-

• The improvement in the technology due to which new investment come into any country
• Business taxes, for example in any country if business tax is high then investment will be less. Example of this can be corporate taxes
• Expectations