If firms are more pessimistic and believe that future profits will fall and remain weak for the next few years,then
A)investment spending will fall.
B)investment spending will rise.
C)investment spending will remain unaffected.
D)investment spending will rise and then fall.

Question

Quizplus · Accepted Answer

If firms are pessimistic about future profits, they are less likely to invest in expanding their business or buying new equipment, which would result in a decrease in investment spending.

If Firms Are More Pessimistic and Believe That Future Profits