One Reason That Investment Spending Tends to Decline During Recessions

question 17

Multiple Choice

One reason that investment spending tends to decline during recessions is that

• A)interest rates tend to rise, reducing the expected future profitability of investment projects undertaken with borrowed funds.
• B)many firms experience a decline in internal funds.
• C)government spending tends to rise, which crowds out investment spending.
• D)many firms experience an increase in taxes, reducing the expected future profitability of investment projects.

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Definitions:

Sensory Synapses

The connection points between sensory neurons and their target cells, where the transmission of sensory information takes place.

Transmitter-activated Receptors

Receptors on the surface of neurons that respond to neurotransmitters, triggering a response in the target cell.

Chemical Transmitters

Molecules released by neurons to transmit signals across synapses to other neurons, muscles, or glands.