Why Is Investment Demand More Unstable Than Personal Consumption

question 50

Multiple Choice

Why is investment demand more unstable than personal consumption?

• A) Because business decisions are often made based on the expectations, and moods of optimism and pessimism concerning future economic conditions.
• B) Because business decisions are often made based only on interest rates.
• C) Because business decisions are made more often than personal purchasing decisions.
• D) Because personal purchasing decisions are often made based on the forecasts of future sales.

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Definitions:

Demand Curve

A graphical representation of the relationship between the price of a good and the quantity of that good that consumers are willing to purchase.

Product Supply Curve

A graphical representation showing the relationship between the price of a product and the quantity of the product that a supplier is willing and able to supply.

Production Technology

The methods, equipment, and processes used to produce goods or services, influencing efficiency and output quality.

Demand Curve

A graph depicting the relationship between the price of a good or service and the quantity demanded for a given period.