If Firms Expect Greater Demand for Their Products,invest in More

Multiple Choice

If firms expect greater demand for their products,invest in more capital and hire more labor,

A) there will likely be an increase in inflation and a rise in taxation
B) the business cycle is likely to be moving from peak to trough
C) their behavior may encourage the very prosperity that they expect
D) government will probably have to spend more and tax less to offset the economic impacts of these business decisions
E) consumers will probably spend less in anticipation of a decline in economic activity