Comparison between Induced and Autonomous Investments:
(i) Induced investment is income-elastic (i.e., rise in level of national income implies rise in level of investment) whereas Autonomous investment is income-inelastic.
(ii) Induced investment is positively related to national income but the Autonomous investment is unrelated to national income.
(iii) Induced investment is determined by consideration of profit, whereas Autonomous investment is determined by consideration of social welfare.
(iv) Induced investment curve is positively sloped but Autonomous investment curve is horizontal straight line parallel to X-axis, According to Keynes during short period firms plan to invest the same amount every year. Ex-ante investment demand (I) may be written as I indicating autonomous.
