Which of the Following Is a Reason Why a Greater

Multiple Choice

Which of the following is a reason why a greater capital stock can reduce investment?

A) A greater capital stock is likely to lead to less investment because further increases in the demand for investment tend to raise the cost of capital.
B) Since businesses undertake investment to adjust their stock of capital to its desired level, the amount of investment needed to reach the desired level will be lower when the current capital stock is higher.
C) A greater capital stock is likely to lead to less investment since there will be less old capital to replace.
D) The rate of new technological innovations tends to deter investment in new capital because capital becomes obsolete at a faster rate.