Investment influenced by expectations from "summary" of The General Theory of Employment, Interest, and Money by John Maynard Keynes
Investment is influenced by expectations. Entrepreneurs base their decisions to invest on their anticipation of future conditions. It is not the current state of affairs that determines investment, but rather the outlook for the future. This is because investment is a forward-looking activity, requiring a consideration of potential returns and risks.
Expectations play a crucial role in investment decisions. If entrepreneurs are optimistic about future profits, they are more likely to invest in expanding their businesses. Conversely, if they are pessimistic about the economic outlook, they may hold back on investment, leading to a slowdown in economic activity.
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