Much of the nation's capital stock is idle during a recession and therefore firms have incentives to invest in more.

Question

Quizplus · Accepted Answer

During a recession, firms often have excess production capacity and idle capital, leading to a decrease in investment due to lower demand for goods and uncertainty about future profits. Therefore, firms may not have incentives to invest in more capital during a recession.

Much of the Nation's Capital Stock Is Idle During a Recession