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In economics, induced demand – related to latent demand and generated demand [1] – is the phenomenon whereby an increase in supply results in a decline in price and an increase in consumption. In other words, as a good or service becomes more readily available and mass produced, its price goes down and consumers are more likely to buy it ...
Investment is often modeled as a function of interest rates, given by the relation I = I (r), with the interest rate negatively affecting investment because it is the cost of acquiring funds with which to purchase investment goods, and with income positively affecting investment because higher income signals greater opportunities to sell the ...
Investment, in turn, is assumed to be composed of three parts: = + + The first part is autonomous investment, the second is investment induced by interest rates and the final part is investment induced by changes in consumption demand (the "acceleration" principle). It is assumed that b > 0.
Also called resource cost advantage. The ability of a party (whether an individual, firm, or country) to produce a greater quantity of a good, product, or service than competitors using the same amount of resources. absorption The total demand for all final marketed goods and services by all economic agents resident in an economy, regardless of the origin of the goods and services themselves ...
From a broader viewpoint, an investment can be defined as "to tailor the pattern of expenditure and receipt of resources to optimise the desirable patterns of these flows". When expenditures and receipts are defined in terms of money, then the net monetary receipt in a time period is termed cash flow , while money received in a series of ...
The everyday usage of investment largely coincides with the one used by financial economists—the acquisition and holding of potentially income-generating forms of wealth such as stocks and bonds. [10] Sometimes the everyday usage of investment refers to consumption of durables (e.g. "I'll invest in a new gaming console.").
Capital accumulation is the dynamic that motivates the pursuit of profit, involving the investment of money or any financial asset with the goal of increasing the initial monetary value of said asset as a financial return whether in the form of profit, rent, interest, royalties or capital gains.
Induced innovation is a microeconomic hypothesis first proposed in 1932 by John Hicks in his work The Theory of Wages. He proposed that "a change in the relative prices of the factors of production is itself a spur to invention , and to invention of a particular kind—directed to economizing the use of a factor which has become relatively ...