Aging baby-boomers, predisposed to hearing loss because of years of listening to loud music, are now approaching the age range in which hearing loss starts to become apparent. What effect does this have on investment spending within the hearing aid industry?
A) There will no longer be an opportunity cost associated with investment spending.
B) There will be no change in real investment spending, because hearing aid manufacturers will look only at the interest rate in determining whether to expand production.
C) The investment function relating planned real investment spending to the interest rate can be expected to shift rightward.
D) The investment function relating planned real investment spending to the interest rate can be expected to shift leftward.

Question

Quizplus · Accepted Answer

As more baby-boomers require hearing aids, the demand for these products will increase. This will create an opportunity for manufacturers to expand production, leading to an increase in investment spending. This increase in investment will cause the investment function to shift rightward.

Aging Baby-Boomers, Predisposed to Hearing Loss Because of Years of Listening