Investment

Question	Answer
CONSUMPTION	SPENDING BY INDIVIDUALS AND HOUSEHOLDS ON CONSUMER GOODS
INVESTMENT	SPENDING ON CAPITAL BY BUSINESSES AND FIRMS
CAPITAL	MAN MADE AIDS TO PRODUCTION. E.G. MACHINERY, EQUIPMENT, FACTORIES ETC.
CAPACITY UTILISATION	THE EXTENT TO WHICH A FIRM IS USING THEIR CAPITAL GOODS
CORPORATION TAX	A TAX ON A FIRM'S PROFITS
INFLUENCES ON INVESTMENT	-CHANGE IN REAL DISPOSABLE INCOME -EXPECTATIONS -CAPACITY UTILISATION -CURRENT PROFIT LEVELS -CORPORATION TAX -INTEREST RATES -ADVANCES IN TECHNOLOGY -PRICE OF CAPITAL EQUIPMENT
INFLUENCES ON INVESTMENT: CHANGE IN REAL DISPOSABLE INCOME	IF REAL INCOME INCREASING, DEMAND FOR CONSUMER GOODS AND SERVICES ALSO LIKELY TO RISE.MAY ENCOURAGE FIRMS TO EXPAND CAPACITY. THIS MEANS FIRMS MAY BE LIKELY TO BUY NEW MACHINERY, EXPAND THEIR PREMISES OR INVEST IN NEW EQUIPMENT TO TRY TO MEET ANTICIPATED INCREASE IN DEMAND.
INFLUENCES ON INVESTMENT: EXPECTATIONS	THE EXPECTATIONS OF AN IMPROVING ECONOMIC FUTURE MAY ENCOURAGE FIRMS TO INVEST
INFLUENCES ON INVESTMENT: CAPACITY UTILISATION	THE EXTENT TO WHICH A FIRM IS USING ITS CAPITAL GOODS. IF FIRMS ARE WORKING AT CLOSE TO FULL CAPACITY, THEN THEY ARE LIKELY TO WANT TO INVEST. IF THEY HAVE A LOT OF SPARE CAPACITY THEY CAN MATCH DEMAND WITHOUT HAVING TO BUY NEW EQUIPMENT OR MACHINERY.
INFLUENCES ON INVESTMENT: CURRENT PROFIT LEVELS	HIGH LEVELS OF PROFIT CAN ENCOURAGE INVESTMENT IN TWO WAYS. THEY PROVIDE FINANCE TO INVEST AND THEY ARE LIKELY TO CONTRIBUTE TO OPTIMISM ABOUT THE FUTURE.

Resource summary

	Created by Alan Stone over 9 years ago