The Planned Investment

The planned investment often denoted by I consists of capital stocks and inventory planned by the firm. For now, we assume I to be fixed. It does not change when income changes. Hence I is an autonomous /exogenous expenditure. That is I =I *. since it's not affected by income and is fixed, its graph is horizontal

Lecture notes:Dr. Monica Lambon-Quayefio, College of Social Sciences,Economics Department,2018/2019 Academic Year

Book Reference:Case,K. E., Fair, R. C., & Oster, S. M. (2012). _ Principles of Economics_ .10th ed, USA: Pearson Education Inc