If firms are more optimistic that future profits will rise and remain strong 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

When firms are more optimistic about future profits, they are more likely to increase their investment spending in order to expand their business and take advantage of potential growth opportunities. Therefore, in this scenario, investment spending is expected to rise.

If Firms Are More Optimistic That Future Profits Will Rise