Investment and Investment Demand

In recession prices are fixed, wages are fixed, employment level is flexible
intermediate- prices are flexible, wages fixed, employment level is flexible
inflation- prices are flexible wages, wages are fixed, employment level is fixed
nominal wages- The amount of money received by a worker per unit of time.

Real wages- the amount of goods and services a worker can purchase with their nominal wage

Sticky wages- Nominal wage level that is set according to an initial price level and it does not vary due to labor contracts or other restrictions

Investment

Money spent or expenditure:

• New plants (factories)
• capital equipment (machinery) 
• Technology ( hardware and software)
• New homes
• Inventories (goods sold by producers) 

expected rates of return:

• cost/benefit analysis
• expected rate of return (determining benefits)
• interest cost
• compare expected rate of return to interest cost 

$ expected return < interest to cost (no investment)

$ expected return > interest cost invest

$ This is used when determining the amount of investment an investor should undertake