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what are the various ways in which policy can raise the level of investment ? suppose...

what are the various ways in which policy can raise the level of investment ? suppose the economy is at full employment so that increases in aggregate expenditures would be inflationary . nevertheless , it is desirable to raise the share of investment in full employment income . what kinds and combinations of policies would be needed ?

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to raise level of investment central bank can choose easy monetary policy. easy monetary policy will lower the interest rate which will ultimately increase investment demand for money and investment will increase. expanxionary fiscal policy is another way which government can use to increase investment in the economy. if the economy is at full employment and still then investment spending is needed without making it inflotaniory then government should go for combination of two policies, easy monetary policy and tight fiscal policy. easy mnetary policy will help to increase investment spending and tight fiscal policy will help to reduce inflation so this combination will work well to get the job done.

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