Which of the Following Will Shift the Investment Demand Curve

question 32

Multiple Choice

Which of the following will shift the investment demand curve to the left?

• A)an expectation that there will be an upsurge in the level of economic activity
• B)an increase in the capital gains tax rate
• C)an increase in the market interest rate
• D)the government institutes investment tax credits for business undertaking investments

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Definitions:

Profit-maximizing Output

The level of production at which a firm achieves the highest possible profit, determined where marginal cost equals marginal revenue.

Marginal Product

The additional output that is produced by adding one more unit of a specific input, holding all other inputs constant.

Purely Competitive Market

A market structure characterized by many buyers and sellers, free entry and exit, and a homogeneous product, leading to price taking behavior.

Economic Profit

The difference between the total revenue generated by a business and its total costs, including both explicit and implicit costs.