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continued on 4/11/24
Investment definition (overall)
The addition to the capital stock of the economy i.e factories, machines, offices and stock of materials used to produce other goods
What are savings investment
Savings represent the total amount of income tat is not consumed by households businesses or the government
What is capital investment
Capital invest is spending on machinery equipment, factories, technology and infrastructure to create new capital goods
Calculation for net investment
Net investment = gross investment – capital depreciation.
What is gross investment?
Gross investment is total investment on new capital inputs. It is the total amount that the economy spends on new capital goods
What is net investment
Gross investment - capital consumption (depreciation). Some new investment is needed each year to replace worn out machinery
What is a margin
A possible point of change
What is the marginal efficiency of capital
The rate of return a business expects to earn from an additional unit (hence the margin) of capital given the cost of the capital.
What is the accelerator theory
This theory states that the level of investment depends on the rate of change of national income.
Note 
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