Which of the following would cause a leftward shift in the investment function?
A) technological progress
B) an increase in the rate of interest
C) optimistic expectations about business conditions
D) a decrease in business taxes

Question

Quizplus · Accepted Answer

An increase in the rate of interest would make investment more expensive and less attractive, leading to a decrease in the amount of investment being made. This would cause a leftward shift in the investment function.

Answer: D 
 A decrease in business taxes would make investment more profitable and more attractive, leading to an increase in the amount of investment being made. This would cause a rightward shift in the investment function. Therefore, it is not the choice that would cause a leftward shift in the investment function.

A and C are not the correct choices because they would cause a rightward shift in the investment function. Technological progress would make investment more productive and profitable, while optimistic expectations about business conditions would increase the perceived profitability and thus attractiveness of investment.

Which of the Following Would Cause a Leftward Shift in the Investment