Changes in Business Investment Are Important Because

question 63

Multiple Choice

Changes in business investment are important because

• A)investment spending is the largest component of aggregate demand.
• B)investment spending can be easily directed by government policy.
• C)investment spending is the most volatile component of aggregate demand.
• D)increases in investment spending decrease capacity utilization and stimulate additional spending on inventories.

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Definitions:

Inelastic Segment

A portion of the market where the demand for a product or service is relatively unresponsive to changes in price.

Barriers to Entry

Factors that prevent or hinder companies from entering a specific market or industry.

Monopoly Power

The significant control or exclusive possession of the market by a single entity, allowing it to influence price or terms of sale for goods and services.

Inelastic Portion

Part of the demand curve where the quantity demanded changes minimally in response to price changes.