Question

Which statement correctly describes autonomous investment as income-inelastic?

Options

• It falls sharply during economic depression because profit expectations are low

• As national income rises, it rises; as income falls, it falls

• It remains the same whether the economy is booming or in recession

• It is the actual investment that takes place

Answer 1

Income-inelastic autonomous investment remains unchanged in a boom or recession. It is not determined by changes in national income.