An increase in investment demand would most likely be caused by a(n)

Question

Quizplus · Accepted Answer

An increase in the level of economic activity usually leads to increased investment demand as firms expand their operations and require more capital goods to produce additional output. Increases in market interest rates (option A) would lead to a decrease in investment demand as the cost of borrowing increases. An increase in the cost of new capital goods (option C) would discourage investment demand as it would make it more expensive for firms to acquire new equipment. A decrease in the expected demand for output (option D) would also discourage investment demand as firms would have less incentive to produce additional output.

An Increase in Investment Demand Would Most Likely Be Caused