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 increase investment?
I. A greater capital stock is likely to lead to more investment because further increases in the
Demand for investment tend to lower the cost of capital.
II. A greater capital stock is likely to lead to more investment since there will be more capital to replace.
III. A higher level of capital stock encourages investment in new capital because capital becomes obsolete at a faster rate.

A) I and II only
B) II and III only
C) II only
D) I, II, and III