What is induced investment?
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Yogita Ingle 6 years, 1 month ago
Induced investment refers to the investment which is made with the motive of earning profit as it is done in private sector. Induced investment depends directly upon profit expectations. It is income-elastic. If national income goes up, induced investment also goes up, i.e., increase in income induces investment. Its reason is that increase in national income leads to an increase in demand for goods and services which raises the expected profitability of producers. Thus producers are induced to make great investments. In short, induced investment takes place when level of income and demand in the economy goes up.
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