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Define induced investment: investment in inventories and equipment which is derived from and varies with changes in final output âdistinguished from â¦ investment in inventories and equipment which is derived from and varies with changes in final output âdistinguished from autonomous investmentâ¦ See the full definition
In a small open economy, if the government encourages investment, say through an investment tax credit, investment: increases and is financed through an increase in national saving. increases and is financed through an increase in exports. increases and is financed through an inflow of foreign capital.6. In the small open economy in equilibrium: saving is fixed and investment is determined by the investment function and the world interest rate. investment is fixed and saving is determined by the saving function and the world interest rate.