Describe the effects of the price rise on the capital investment.
Answers
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...
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the uncontrolled price rise described as hyper invention as the following effects on capital invention in its to fall in value of money and decline in purchasing power leading to reduce Savings and capital investment the shortage of capital discourages the entrepreneurs from taking risk in production activities as the value of money decline progressively the money plate people change their option of investment then went in precious metals like cold in real estate and thereby fonts are not available for the following activities