Private investment demand

Question

What is Private investment demand?What is the difference between ex-post &ex-ante demand??……Plz help

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Economics Ankush Bansal 3 months 1 Answer 80 views 0

Answer ( 1 )

  1. Private investment refers to the outlay made by the private businessmen which produces durable capital goods that increase the economy’s capacity to produce. It is based on the consideration of profit. If profit prospects are low, then private investment will fall leading to a fall in aggregate demand and the consequent decline in aggregate output and employment.

    Ex-ante demand is the planned consumption and investment expenditure of the secotrs of economy at given period of time.

    Ex-post demand is the actual consumption and investment expenditure of the secotrs of economy at a given period of time.
    Ex-ante demand is what they wish to purchase and ex- post is what they actually purchase.

    Symbolically:-

    Actual investment = Planned investment + Unplanned investment

    Hence, actual investment may differ from planned investment because of unplanned addition or reduction in inventories (stock of goods).

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