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which of the following could be a direct cause of investment soending increasing?

which of the following could be a direct cause of investment soending increasing?

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Answer #1

Direct causes for increase in investment spending :

  • Interest rates - A decrease in the interest rate, increases investmen spending because the cost of borrowing is less
  • Changes in demand - When economic growth is more, Aggregate Demand will rise, as a result of which investors would want to cash in with more investments to meet future demands.
  • Expectation - When investors speculate that future demand will increase or they are confident about the future costs, they would increase their investment spending to meet the new economic capacity.
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