Under What Circumstances Will Increases in Investment Tend to Occur

question 34

Multiple Choice

Under what circumstances will increases in investment tend to occur?

• A)when the interest rates start to increase
• B)when consumers become more optimistic in their expectations toward the future
• C)when the level and rate of change of profits increases
• D)when inventories unexpectedly increase

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Definitions:

Excess Cash

The amount of cash holdings that exceeds what a company requires for its immediate operational needs, often considered for investment or distribution.

Little Return

A situation where an investment yields a minimal profit, often below the expectations of the investor.

Low Level of Cash

This term indicates a situation where a business or individual has minimal amounts of liquid assets or money on hand.

Precautionary Demand

The desire to hold cash or liquid assets to guard against unexpected events.