Autonomous Investment

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Autonomous Investment

An investment which is independent of the level of GDP is called autonomous investment. In simple words, such investment is not influenced by the change in GDP. The volume of such Investment remains unaltered whatever may be the change in the GDP level. This is because ‘autonomous investment’ is determined by the factors other than the GDP. Much of the long range investment in housing, roads, public works, etc. belongs to the category of autonomous investment.

As shown the curve la showing autonomous investment is parallel to the X- axis. When the level of GDP is OM, the amount of investment is AM.

Even when the GDP goes up to OM1 the investment remains at the same level of BM1 which is equal to AM. The level of autonomous investment, thus, does not change with the level of GDP. This is because autonomous investment depends more on factors like population growth, technical progress, etc., the on anything else.

Autonomous Investment

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