If Firms Expect Greater Demand for Their Products,invest in More

question 98

Multiple Choice

If firms expect greater demand for their products,invest in more capital and hire more labor,

• A)there will likely be an increase in inflation and a rise in taxation
• B)the business cycle is likely to be moving from peak to trough
• C)their behavior may encourage the very prosperity that they expect
• D)government will probably have to spend more and tax less to offset the economic impacts of these business decisions
• E)consumers will probably spend less in anticipation of a decline in economic activity

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