keynesian theory of investment
Interest rates and planned capital investment The Keynesian theory of investment places emphasis on the importance of interest rates in investment decisions. But other factors also enter into the model - not least the expected profitability of an investment project. Changes in interest rates should have an effect on the level of planned investment undertaken by private sector businesses in the economy. A fall in interest rates should decrease the cost of investment relative to the potential yield and as result planned capital investment projects on the margin may
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