Question 22 of 37
Q.Differentiate between Autonomous and Induced investment.
Puducherry TnboardTamil Nadu HSC (DGE) Commerce Board 2023Subjective· 3mImportance★★★★★
59% · 22/37 Questions
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Start your 14-day free trial to unlock the full solution →Autonomous investment is independent of income/profit and made for welfare (income-inelastic); induced investment depends on income, demand and profit (income-elastic).
| Basis | Autonomous Investment | Induced Investment |
|---|---|---|
| Meaning | Investment made independently of the level of income or profit | Investment made in response to changes in income, demand or profit |
| Motive | Social welfare and long-term development | Profit and higher demand |
| Made by | Mainly the government / public authorities | Mainly private entrepreneurs |
| Relation to income | Income-inelastic (does not change with income) | Income-elastic (rises and falls with income) |
| Examples | Roads, dams, public buildings, infrastructure | New factories, machinery bought when demand rises |
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