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Q.Answer within 30 words : What is investment demand?

ChseodishaCHSE Odisha Plus Two (Class 12) Commerce Board 2019Subjective· 2mImportance★★★★★est
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Investment demand is the economy's demand for new capital goods and additions to stock for future production.

This 2-mark CHSE Odisha +2 Business Economics item deals with a macroeconomic concept central to the Keynesian theory of income determination.

Investment demand refers to the amount of expenditure that firms wish to make on new capital assets — fixed investment (plant, machinery, buildings) and inventory investment (additions to stocks) — in order to produce goods and services in the future. According to Keynes, the level of investment demand depends on:

  • the marginal efficiency of capital (the expected rate of return on new investment), and
  • the rate of interest (the cost of funds). …

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