Question

Bring out the main types of investment.

Explain various types of investment.

Answer 1

1. Gross Investment: Total expenditure on capital goods at any time, comprising net investment and replacement investment.
2. Net Investment: Gross investment minus replacement investment, representing the addition to the economy’s stock of capital assets, thus increasing productive capacity.
3. Autonomous Investment: Investment independent of income or profit, often by the government for long-term projects like infrastructure and new technology.
4. Induced Investment: Investment influenced by income and profit levels; it fluctuates with economic activity and is mainly motivated by profit expectations.
5. Replacement Investment: Investment made to replace worn-out or obsolete capital without increasing the capital stock.
6. Planned (Ex-ante) Investment: Investment made intentionally according to plans to achieve specific objectives.
7. Unplanned (Ex-post) Investment: Involuntary investment arising due to unforeseen circumstances, such as the accumulation of unwanted inventory.