2 The major determinants of investment are (a) current sales relative to the produc- tive capacity of

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2 The major determinants of investment are

(a) current sales relative to the produc- tive capacity of the existing productive facilities,

(b) expectations about future sales, and

(c) the interest rate. Keynes perceived that during a period of depressed economic con- ditions, investment would be largely unresponsive to changes in the interest rate.

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Essentials Of Economics

ISBN: 396414

2nd Edition

Authors: James D Gwartney; Richard Stroup; J R Clark

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