Investment spending will decrease when
A)the interest rate falls.
B)the corporate income tax decreases.
C)business cash flow decreases.
D)firms become more optimistic about earning future profits.
E)governments reduce compliance costs.

Question

Quizplus · Accepted Answer

Investment spending is often determined by the amount of cash flow that businesses have available for investment purposes. If business cash flow decreases, then investment spending is likely to decrease as well. The other options are unlikely to cause a significant decrease in investment spending.

Investment Spending Will Decrease When