Which of the following statements is true?

Statement 1- Induced investment changes with the change in rate of interest and income level in an economy.

Statement 2- Autonomous investment increases with increase in the level of income in an economy.

Only statement 1 is true

The correct answer is Option1 : Only statement 1 is true

tatement 1: Induced investment changes with the change in rate of interest and income level in an economy. This is true. Induced investment refers to the changes in investment that occur in response to changes in the level of income and the rate of interest. As income increases, businesses may invest more due to higher expected returns, and changes in the interest rate can affect the cost of borrowing, influencing investment decisions.

Statement 2: Autonomous investment increases with increase in the level of income in an economy. This is not true. Autonomous investment is investment that occurs regardless of the level of income or output. It is independent of the current level of economic activity and is not influenced by changes in income levels. Autonomous investment is typically driven by factors such as technological advances, business expectations, or government policies, rather than changes in income.