Which of the Following Could Be a Direct Cause of Investment

question 69

Multiple Choice

Which of the following could be a direct cause of investment spending decreasing?

• A) Real income increases.
• B) Real interest rates increase.
• C) A firms revenues increases while their costs remain constant.
• D) Expected future income increases.

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Definitions:

Unit Elastic

A situation where a percentage change in the price of a good results in an equal percentage change in the quantity demanded.

Inelastic

Describes a situation where the demand or supply for a good or service is not significantly altered when the price changes.

Elastic

Elastic describes a situation in economics where the quantity demanded or supplied changes significantly in response to price changes.

Price Elasticity

The extent to which changes in price affect the demand for a specific good.