Multiple Choice
One reason that investment spending tends to decline during recessions is that
A) interest rates tend to rise, reducing the expected future profitability of investment projects undertaken with borrowed funds.
B) many firms experience a decline in internal funds.
C) government spending tends to rise, which crowds out investment spending.
D) many firms experience an increase in taxes, reducing the expected future profitability of investment projects.
Correct Answer:
Verified
Correct Answer:
Verified
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