What impact would a combination of improved,expected future profitability of businesses and higher business taxes have?
A)It would leave the investment demand curve unchanged.
B)It would decrease the investment demand curve.
C)It could either increase or decrease the investment demand curve.
D)It would increase the investment demand curve.

Question

Quizplus · Accepted Answer

The combination of improved, expected future profitability of businesses could increase the investment demand curve as businesses see opportunities for growth and expansion. However, higher business taxes could decrease the investment demand curve as businesses have less money available for investment. The overall effect on the investment demand curve would depend on the magnitude of these two factors and how they offset each other. Therefore, the correct answer is (C), as it could either increase or decrease the investment demand curve.

What Impact Would a Combination of Improved,expected Future Profitability of Businesses