If the expected profitability of a business activity increased we might expect investment spending to:
A) increase.
B) decrease.
C) remain constant.
D) there is not enough information to determine what would happen.

Question

Quizplus · Accepted Answer

When the expected profitability of a business activity increases, the potential returns on investment increase. This encourages individuals and firms to invest more, as they perceive the activity to be a profitable investment opportunity. As a result, investment spending would increase.

If the Expected Profitability of a Business Activity Increased We