Question

Describe the effect of prise rise on capital investment

Answer 1

Multiplier Effect. If there is spare capacity in the economy, an increase in investment could cause a knock on effect throughout the economy. The initial increase in investment causes a rise in output and so people gain more income, which is then spent causing a further rise in AD

Answer 2

hey mate here's ur ans hope it helps you

multiplier effect. if there is spare capacity in the economy and increase in investment could cause knock on effect throughout the economy. the initial increase in investment causes a rise in output and so people can gain more income which is then spent causing a for the rise in AD.