Investment spending will increase when
A)the interest rate rises.
B)the corporate income tax increases.
C)business cash flow increases.
D)firms become more pessimistic about earning future profits.
E)when the nominal interest rate falls.

Question

Quizplus · Accepted Answer

Investment spending typically increases when businesses have more cash flow available to invest in new projects and expansion. Increased cash flow can result from increased profits, decreased expenses, or improved efficiency. The other options, such as rising interest rates, higher corporate taxes, pessimism about future profits, or falling nominal interest rates, are all more likely to have a negative impact on investment spending.

Investment Spending Will Increase When