Which of the following will cause planned investment expenditures to eventually increase?
A) a decrease in money supply
B) an increase in demand for money
C) a fall in interest rate
D) managers who are pessimistic about the future

Question

Which of the following will cause planned investment expenditures to eventually increase?  
A) a decrease in money supply 
B) an increase in demand for money 
C) a fall in interest rate 
D) managers who are pessimistic about the future

Quizplus · Accepted Answer

A fall in interest rates will cause the cost of borrowing money to decrease, making investments more attractive to firms. This will lead to an increase in planned investment expenditures over time. The other options are unlikely to cause an increase in planned investment expenditures. A decrease in the money supply and an increase in demand for money will both make borrowing more expensive, which would lead to a decrease in planned investment expenditures. Managerial pessimism could also lead to a decrease in planned investment expenditures.

Which of the Following Will Cause Planned Investment Expenditures to Eventually