Investment

Investment is the expenditure(E) on new capital equipment which will be used to produce final goods & services(g+s) in the future. It includes building construction, housing, etc.

Factors Affecting Investment:

The level of I is the most volatile component of AE, particularily because it is forward planning/focused.

Determinants

The level of investment in the economy is determined by:

(T) → Taxation
(W) → World events
(I) → Inflation
(G) → Government policies
(I) → Interest rates
(S) → Stocks
(P) → Past profits
(E) → Expectations
(C) → Competition

think TWIGISPEC!

Private sector investment comprises 10-20% of AE.

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