If businesses are pessimistic, they are _____. moving up, along the investment demand curve more likely...
If businesses are pessimistic, they are _____.
-
moving up, along the investment demand curve
-
more likely to borrow and invest
-
less likely to borrow and invest
-
moving down, along the investment demand curve
Homework Answers
If businesses are pessimistic then this implies that they believe
that economic conditions in the future would be worse. This means
they do not see any profit making opportunity in the current and
near future time period.
This fall in profit expectation will refrain them from making any new investment. Businesses borrow to make investment.
So, this refrain from making any new investment will induce them to borrow less as well.
Thus,
If businesses are pessimistic, they are less likely to borrow and invest.
Hence, the correct answer is the option (c).
Add Answer to:
If businesses are pessimistic, they are _____.
moving up, along the investment demand curve
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