For an investment to be considered autonomous, it must
A) be negatively related to the interest rate.
B) increase as the level of income increases.
C) include fixed components.
D) be independent of the level of real disposable income.

Question

Quizplus · Accepted Answer

Autonomous investment refers to investment spending that is not influenced by changes in the level of real disposable income. Therefore, it must be independent of the level of real disposable income. Option A is incorrect because the relationship with the interest rate does not define autonomous investment. Option B is incorrect because the investment may or may not increase with the level of income. Option C is incorrect because fixed components do not necessarily make an investment autonomous.

For an Investment to Be Considered Autonomous, It Must