An effort by the Fed to reduce aggregate demand may be thwarted because
A) investment could remain the same or increase because of optimistic expectations by businesses about the future of the economy.
B) investment and interest rates are positively related.
C) investment could fall because of pessimistic expectations.
D) taxes may have been increased.

Question

Quizplus · Accepted Answer

If businesses have optimistic expectations about the future of the economy, they may continue to invest the same amount or even increase their investment, despite efforts by the Fed to reduce aggregate demand.

An Effort by the Fed to Reduce Aggregate Demand May