Question

What is autonomous investment and what is its role in the economy?

Hint:

Autonomous investment is crucial for initiating economic growth, regardless of short-term economic conditions.

Answer 1

Step 1: Define autonomous investment.
Autonomous investment refers to the level of investment that occurs in an economy regardless of the current level of national income or economic activity. It is driven by factors such as technological progress, government policies, or expectations of future profit.
Step 2: Role of autonomous investment in the economy.
Autonomous investment plays a crucial role in boosting economic growth by increasing capital stock and improving productivity. It is typically non-income dependent and often initiated by government expenditure or private sector decisions.
Step 3: Conclusion.
Thus, autonomous investment is a key driver of economic expansion, as it leads to increased production capacity and contributes to long-term economic development. Final Answer: \[ \boxed{\text{Autonomous investment is independent of current income and drives long-term economic growth.}} \]