The investment function implies that current output does not ...

[chandani]

The investment function implies that current output does not influence investment. Does that make sense?
 
  What will be an ideal response?

Question 2

If households save 0.20 of each additional dollar of increased income and spend the rest, the expenditure multiplier will be
 
  A) 1.25.
  B) 2.
  C) 5.
  D) 8.

[aidanmbrowne]

Answer to Question 1

Yes. Planned investment relies mostly on business expectations of future economic activity. Fluctuations in current activity affect investment as unplanned inventory changes and, perhaps, as an updating of expectations, causing a change in autonomous investment.

Answer to Question 2

C

[chandani]

Thanks for the timely response, appreciate it

[sultana.d]

Gracias!