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The investment function would shift inward to the left if real disposable income decreased. interest rates...

The investment function would shift inward to the left if

real disposable income decreased.
interest rates increased.
there was an increase in business taxes.
there was a positive change in productive technology.
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Answer #1

Option C.

  • The investment function would shift inward to the left if there was an increase in business taxes.
  • The investment function specifies the the various variables that influence the aggregate investments in the economy.
  • If the firms find more returns from a capital, they are willing to invest on it in long run which increases the investment.
  • But when they face higher taxes, they do not make big investments, which leads to an inward shift of the investment function to the left.
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