The Investment Function Would Shift Outward to the Right If

question 209

Multiple Choice

The investment function would shift outward to the right if

• A) real disposable income decreased.
• B) interest rates decreased.
• C) there was a decrease in business taxes.
• D) there was more uncertainty about future economic conditions.

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Definitions:

Capital Budgeting

The process by which investors and managers decide which significant investments or projects to undertake, based on potential profitability.

Risk

The potential for loss, damage, or any other negative occurrence that may be avoided through preemptive action.

Probability Distributions

Mathematical functions that describe all the possible values and likelihoods that a random variable can take within a given range.

Cost of Capital

The cost of funds used for financing a business, calculated as the weighted average of debt and equity costs.