why is autonomous investment essential
Answers
It depends on the type of investment. ... In the long term, investment is important for improving productivity and increasing the competitiveness of aneconomy. Without investment, an economy could enjoy high levels of consumption, but this creates an unbalanced economy.An autonomous investment is an investment in a country that is made without regard to the level of economic growth.Autonomous investments contrast to induced investments, which increase or decrease in response to the level of economic growth. Induced investments aim to generate a profit. Since they respond to shifts in output, they tend to be more variable than autonomous investments; the latter act as an important stabilizing force, helping to reduce volatility in induced investment.