Suppose that firms expect greater demand for their products, invest in more capital, and hire more labour.Which of the following characterizes how the economy will be affected?
A) Inflation will likely increase and taxation will likely rise.
B) The business cycle is likely to move from peak to trough.
C) The expected prosperity will likely be encouraged.
D) Consumers will probably spend less in anticipation of a decline in economic activity.

Question

Suppose that firms expect greater demand for their products, invest in more capital, and hire more labour.Which of the following characterizes how the economy will be affected?  
A) Inflation will likely increase and taxation will likely rise. 
B) The business cycle is likely to move from peak to trough. 
C) The expected prosperity will likely be encouraged. 
D) Consumers will probably spend less in anticipation of a decline in economic activity.

Quizplus · Accepted Answer

The Answer is C

Suppose That Firms Expect Greater Demand for Their Products, Invest