What is the relationship between consumption and investment,consumption and money demanded? and The Green Investment Bank

What is the relationship between consumption and investment,consumption and money demanded?

I just want to know whether investment depends on consumption and whether consumption depends on money demanded


Investment best answer:

Answer by Aleconomixt
Households and firms react to money in opposite ways - households consume the money they get from firms and firms want money from households to invest.
Remember in circular flow, I comes in injections and S comes in leakages. And where is C ? C is the static component ( for the time being).
Now, more C is certainly more Y but an "incremental" I adds to that Y and that I comes from both firm's savings and household savings .... so people consuming more have less to make available for Investment.
Then for consumption - you have to consider long run and short run. In short run, consumption is independent of money demanded but in long run the money demanded during the traverse makes more Investments and more products are available and ( most important) more wages were distributed so naturally in the long run consumption depends upon money demanded.

Investment

The Green Investment Bank


Image by Cabinet Office
The Deputy Prime Minister gives a speech on the green economy and the Green Investment Bank, at Climate Change Capital in Central London. Crown copyright

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