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Why do firms invest? What influences the amount that firms spend on investment? Keith Brunskill examines these questions.
* There are several motives why private sector firms invest which include both demand side and supply side aspects.
* Investment is characterised by uncertainty. The state of business confidence is a crucial factor in influencing investment.
* Governments can influence aggregate investment by altering investment by private sector firms and also public sector investment.
PDF format: 3 A4 pages. First published in Economics Today magazine January 2004.
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