Which of the following statements best describe autonomous investment? (Select all that apply)
Select 2 correct answer(s)
A. It is income-inelastic
B. It fluctuates with national income
C. It is guided by social welfare
D. It is governed by profit motive
Answer (2)
The two statements that best describe autonomous investment are 'A. It is income-inelastic' and 'D. It is governed by profit motive.' Autonomous investment remains constant despite changes in income and is often made with profit considerations in mind.
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Autonomous investment refers to the portion of total investment which does not change with the level of income or output in the economy. It is an important concept in economics, particularly in the study of investment behavior and macroeconomic analysis.
The two statements that best describe autonomous investment are:
(A) It is income-inelastic: Autonomous investment is independent of the current level of national income. This means that changes in national income do not affect the level of autonomous investment. It is considered income-inelastic because it remains constant regardless of fluctuations in income.
(C) It is guided by social welfare: In many cases, autonomous investment includes government and public sector expenditures that are aimed at improving social welfare, such as investments in infrastructure, education, and health care. These investments are often made to achieve broader societal goals rather than for immediate economic returns.
Autonomous investment is typically stable and necessary for maintaining an economy's long-term growth potential, even if it doesn't change in response to economic cycles. Instead of responding to profit motives or income changes, it is driven by other factors like technological advancements, policy decisions, and the need to support public objectives.
