Planned And Unplanned Investment

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Planned and Unplanned Investment

Investment may be divided into two parts : viz., (i) Planned investment or intended investment, and (ii) Unplanned investment or unintended investment. Therefore, the total volume of actual or realized investment is the sum of intended and unintended investment. In brief,

               Ir = Ip + Iu
Where   Ir = realized or actual investment,
               Ip = planned investment, and
               Iu = unplanned investment.

Planned investment or intended investment is also known as ‘ ex-ante’ investment, and the realized or actual investment is also known as ‘ex-post’ investment.

Ex-ante investment refers to the investment which the investors plan to invest at different levels of income in the economy. ex-post or realized investment is the sum of planned and unplanned investment. In case the unplanned investment (say investment) is zero, then the planned investment will be equal to the realized investment or ex-ante investment will be equal to ex-post investment.

It should be clear from the above illustration that realized (ex-post) investment in an economy is not always equal tot eh planned (ex-ante) investment. It is only when the unplanned investment is zero that (ex-post) investment will be equal to ex-ante investment.

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