When we assume that investment is autonomous we imply that:
A)it is a fixed constant amount.
B)it is independent of current real GDP.
C)it is a positive function of interest rates.
D)it is actually zero.
E)it has no impact on consumption.

Question

Quizplus · Accepted Answer

Assuming investment is autonomous means that it is independent of current real GDP. This means that changes in real GDP will not affect the level of investment. However, other factors such as interest rates may still have an impact on investment.

When We Assume That Investment Is Autonomous We Imply That