Q10. What is significance of Fixed Investment?
Ans. We know fixed investment implies increase in thestock of fixed assets of the producers. Itimplies increase in the number (or size) of plants and machinery. Accordingly, it implies increase in the scale of production.
Increase in the scale of output means increase in the level of output. Thus, fixed capital formation raises the level of output in the economy, it is a sign of growth and development.
Fixed investment is also called fixed capital formation.