The Existence of Financing Constraints Makes Investment

question 21

Multiple Choice

The existence of financing constraints makes investment:

• A) more sensitive to current conditions.
• B) less sensitive to current conditions.
• C) spending follow a random walk.
• D) spending increase during recessions.

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Definitions:

Direct Payments

Cash payments provided by governments to farmers or businesses, often to support incomes, encourage investment, or protect against price fluctuations.

Countercyclical Payments

Payments made by the government to individuals or businesses during economic downturns to stabilize the economy by increasing purchasing power.

Agricultural Exports

Goods that are produced through farming and agriculture that are sold to other countries.

Instability

The tendency of a system or market to experience unpredictable or erratic changes, potentially leading to chaos or disorder.