Which of the following will increase investment spending?
A) more optimistic business expectations
B) an increase in interest rates
C) an increase in business taxes
D) a decrease in capacity utilization

Question

Quizplus · Accepted Answer

More optimistic business expectations would lead to increased confidence in the economy and potential profitability, encouraging firms to invest more.

Answer: D (if it is interpreted as an increase in capacity utilization leading to a decrease in investment spending)
 If firms are utilizing their existing capacity to produce goods and services, they may not see the need to invest in additional capital, as they are already meeting demand. This could lead to a decrease in investment spending.

Which of the Following Will Increase Investment Spending