Why is investment spending a highly volatile component?
Several factors influence how much businesses want to invest. These include interest rates, tax provisions, technical change, and the strength of the economy. Sometimes these determinants change abruptly, leading to dramatic variations in investment. But perhaps the most important factor accounting for the volatility of investment spending is the state of business confidence, which in turn depends on expectations about the future. Although confidence is tricky to measure, it does seem obvious that businesses will build more factories and purchase more new machines when they are optimistic. Correspondingly, their investment plans will be very cautious if the economic outlook appears bleak.
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If its exports are greater than its imports, then a country has a:
A. trade deficit. B. trade surplus. C. government budget surplus. D. government budget deficit.
Describe how you might analyze and evaluate the following claim: College students who graduate during an economic recession accept jobs that, on average, pay 9% less than jobs accepted by students who graduate during economic expansions
What will be an ideal response?
The Golden Rule of capital accumulation maximizes the steady-state level of
A) output per worker. B) capital per worker. C) consumption per worker. D) investment per worker.
Use the following table to answer the question below. Giovanni's Production Possibilities ScheduleJorge's Production Possibilities SchedulePounds of Green BeansPounds of CornPounds of Green BeansPounds of Corn0160032040120202408080401601204060801600800The terms of trade for 1 pound of green beans must lie between ________ and ________ pounds of corn.
A. 1/4, 6 B. 1, 6 C. 1/4, 1 D. 1, 4