Unlike consumption and saving, investment is an unpredictable and risky undertaking of business enterprises. That is because investment need not follow a trend similar to GNP as was the case with consumption expenditure influencing GNP values. Secondly, consumption expenditure is undertaken by factors of production that emanate from households. Here preferences are assumed to be given and consistent. Investment on the other hand, is an activity solely of the private sector and the government sector. There are no assigned preferences at these levels.
KeywordsInterest Rate Consumption Expenditure Marginal Propensity Automatic Stabilization Factor Income
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