wrote about it for the irish leaving cert! we’re 17/18 by the time we take the exam, so it’s not a huge deal.

shushhhhhh

Sus

Sus

Yes, I think it would, because it may reduce the firms profits due to higher costs, and therefore mean they are less willing to invest in capital, because they may have other priorities.

it would increase a firm's cost of production but they can just pass it on via higher prices especially if demand for that good or service is inelastic. Thus instead they would receive a greater increase in total revenue widening their profit margin. With higher profits, they are more willing to invest

If you just simply throw some numbers into the AD equation ( C + I + G+ (X-M) ) but change the numerical value of Investment but keep everything else constant you see the effect AD has on Investment. However in qualitative terms greater investment in human capital such as schools or training can increase employment due a higher/more proficient labour who have a greater income and greater disposable capital. This can increase their marginal propensity to consume and their demand for goods and services will increase as they will likely spend more capital on durable goods and assets (wealth effect). This is one example their are loads- also I'm relatively new to economics so I'm not 100% sure if this clear and correct but it will definitely give you the general idea.

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its a component of AD so if it increases AD increases

tbh this was such a good question, i went outto think about it and this is my explaination: do you know about the circular flow of income model, well in it there are households & firms, households provide factors of production for which firms give them income and wiht those things, firms make goods n services for which households give spend money on and give them revenue, that is consumption right, so if we consider the government's role and the international market, there's imports n exports, there are taxes and government spending, there's investment and there's saving, now Consumption + Investment + Government Spending + Net Exports (X-M) = AD. what does that mean? I + G + (X-M) are also called 'injections', what that means is that the economy can get money to be spent into the economy through I + G + (X-M) cuz investment means spending of money on things in the economy, government spending is the same, net exports mean people are buying more from us than we are from the world so there's just money that's coming in/being spent on us (the economy) what that implies is that there is something in our economy that has money chasing it, hence, money being spent on it (C + I + G + (X-M)), which is why they are all = AD because they make up the things which explain why there is money coming in or being spent if that makes sense now investment would be spending money into the economy to idk open a new business if ur living outside or invest into capital & technology & machinery etc, why would anyone spend this mo'ney?? clearly there must be some demand for that business or whatever they're investing in technology for, so this investment indicates to us "OHHH there's a demand for something", hence, we know demand in the economy increased because suddenly investment in things increased; you can apply this logic with all the factors of AD

Yes, the two terms are not interchangeable and should not be confused. The multiplier is when there is an injection into the economy (usually from government spending) which leads to a proportionately larger increase in national income. Whilst the accelerator is the idea that as economic growth increase, there will be an even larger increase in investment (or spending on capital goods). So summarised, multiplier refers to an injection and the effect on national income whilst accelerator refers to how rising growth effects investment.

the lower the interest rate, the cheaper it becomes for firms to borrow money from banks and other financial institutions. This means that they now have more money to invest, and meet the hurdle. Make sense?

R V yeah cheers mate rlly appreciate it

Agreed

@@husr6597 he still is after all this time

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officially finished now@@thecouch5565

Most average back of the classroom conversation