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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
To describe this type of investment we have put a bar sign over the head of the curve I. Thus, autonomous investment, as per Fig. 3.9, is income-neutral. (ii) Induced Investment: Investment that is dependent on the level of income or on the rate of interest is called induced investment. Investment that would respond to a change in national income or in the rate of interest is called induced investment. Fig. 3.10 shows that, as national income rises from OY 0 to 0Y 1, (induced) investment increases from OI 0 to OI 1. Thus, investment that is income-elastic is called induced investment. That is,