If firms expect greater demand for their products,invest in more capital and hire more labor,
A)there will likely be an increase in inflation and a rise in taxation
B)the business cycle is likely to be moving from peak to trough
C)their behavior may encourage the very prosperity that they expect
D)government will probably have to spend more and tax less to offset the economic impacts of these business decisions
E)consumers will probably spend less in anticipation of a decline in economic activity

Question

Quizplus · Accepted Answer

By investing in more capital and hiring more labor, firms can increase production and meet the expected demand. This can lead to economic growth and prosperity, benefiting both the firms and the economy as a whole.

If Firms Expect Greater Demand for Their Products,invest in More