Question

What is an investment schedule, and how does it differ from an investment demand curve?

Short answer

An investment schedule is an amount invested by firms altogether at different income levels.

Difference between investment schedule and investment demand:

Investment Schedule	Investment Demand
Investment by firms collectively at different levels of income	Investment planned by firms at different interest rates
Depends on income	Depends on real interest rates and expected rates of return

Step-by-step solution

Meaning of investment schedule

An investment schedule is a set of data for an aggregate amount invested by the firms at different income levels to produce the output. The variable on which the investment schedule depends is income.

It is the supply of investment that is forthcoming in the economy. At equilibrium, the investments are equal to the savings.

For instance, the following investment schedule shows the investment amount at each level of income:

Income (in billion dollars)	Investment (in billion dollars)
400	60
450	70
500	80
550	90
600	100

According to the above table, investment is constantly increasing by $10 billion for each increase of $50 billion in income.

Step 2. Comparison with the investment demand

The differences between the investment schedule and investment demand are as follows:

• An investment demand curve shows the graphical relationship between the aggregate investment that firms may be willing to invest in and different interest rates. In contrast, an investment schedule is a table showing the aggregate amount invested at varying levels of income.

• The investment demand curve involves the expected rate of return and real interest rate, while the investment schedule depends on income.

• The investment demand curve is inversely related to the interest rate. In contrast, the investment schedule is either constant (in the short run) or positively associated with the income (in the long run).