If Firms Became More Optimistic About the Future of the Economy

question 247

Multiple Choice

If firms became more optimistic about the future of the economy, which of the following occurs?

• A) Investment demand increases and the demand for loanable funds curve shifts rightward.
• B) Investment demand decreases and the demand for loanable funds curve shifts leftward.
• C) The quantity of investment demanded increases and there is a movement down along the demand for loanable funds curve.
• D) The quantity of investment demanded decreases and there is a movement up along the demand for loanable funds curve.
• E) The saving decreases and the supply of loanable funds curve shifts leftward.

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Definitions:

Demand Rises

Occurs when there is an increase in the quantity of a good or service that consumers are willing and able to purchase at a given price.

Economic Profit

The disparity measure in between overall returns and full expenses, including both exposed and indirect costs.

Market Supply

The total amount of a product that sellers are willing and able to sell across all relevant price levels within a given market.

Long Run

A period in which all factors of production and costs are variable, allowing firms to adjust fully to market changes.