Investment in economics refers to economic activity that forgoes consumption today, with the purpose of increasing output in the future. It includes spending on tangible assets such as houses as well in intangible investments such as education.
As mentioned in the answer posted above, different authors may classify factors affecting investment decisions by individual firms or companies in different ways. For example, the answer above lists five such factors. However, economists studying nature of investment in general independent of specific industry, country, or time classify all these factors in three groups. These are:
- Demand for output produced by the new investment.
- Interest rates and taxes that influence the cost of new investment.
- Business expectations about the state of economy.
Whether a person is pessimistic or optimistic about future profits from the investments will very much depend about his or her assessment of the above three factors.
If I had to choose only two of the above three factors, I will opt for the second and the third ones. This is because the first factor - demand for output produced by the new investment - can also be considered to be a part of third factor. This is because demand of output is substantially influenced by state of economy.
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