The variability of business profits:
A) Helps explain the instability of investments over time
B) Does not affect investment spending, which depends on expected profits not current profits
C) Explains why the durability of capital goods is variable
D) Causes the variations in consumption spending over time

Question

Quizplus · Accepted Answer

The variability of business profits can help explain the instability of investments over time. If profits are unpredictable or erratic, businesses may be hesitant to invest in new capital goods or other long-term projects because they are unsure of the expected return on investment. This can lead to fluctuations in investment spending.

The Variability of Business Profits