Question

In November 2016, Australia experienced a decrease in business spending on new plant, buildings, equipment, and machinery. What effect would this have had on Australian aggregate demand, all else equal?
Australian consumption would decrease, and Australian aggregate demand would decrease.
Australian net exports would increase, and Australian aggregate demand would increase.
Australian net exports would decrease, and Australian aggregate demand would decrease.
Australian investment would decrease, and Australian aggregate demand would decrease.

Answer 1

Similar things being equal, this would have a negative impact on Australian investment and a positive impact on Australian aggregate demand.

An asset or object purchased with the intention of generating income or appreciation is referred to as an investment. The term "appreciation" describes a rise in an asset's worth over time. When a person buys a product as an investment, they don't intend to utilize it right away; instead, they plan to use it to make money later on.

An investment is usually the use of a resource today—time, effort, money, or an asset—in the anticipation of receiving a larger return than what was first invested. A financial asset, for instance, might be bought by an investor now with the hope that it would provide income later on or be sold for more money.

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