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ACTUAL INVESTMENT: Investment expenditures that the business sector actual undertakes during a given time period, including both planned investment and any unplanned inventory changes. This is a critical component of Keynesian economics and the analysis of macroeconomic equilibrium, which occurs when actual investment is equal to planned investment. The difference between planned and actual investment is unplanned investment, which is inventory changes caused by a difference between aggregate expenditures and aggregate output. Should actual and planned investment differ, then aggregate expenditures are not equal to aggregate output, and the macroeconomy is not in equilibrium.

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Lesson 13: The Firm | Unit 2: Objectives Page: 7 of 24

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  • The primary goal of a human consumer is thus to maximize utility.

  • Utility maximization is the process of obtaining the highest possible level of utility from the consumption or use of goods and services.
  • The primary goal of a business is really no different, in principle, than that of any consumer. The working presumption for business firms is that they seek to maximize profit.

  • Profit maximization is the process of obtaining the highest possible level of profit through the production and sale of goods and services.

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RESOURCES

Labor, capital, land, and entrepreneurship used by society to produce consumer satisfying goods and services. Resources are often given the more descriptive term factors of production.

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The portion of aggregate output U.S. citizens pay in taxes (30%) is less than the other six leading industrialized nations -- Britain, Canada, France, Germany, Italy, or Japan.
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