What are the major factors that determine investment, and what ...

[jeatrice]

What are the major factors that determine investment, and what impact does each have on aggregate demand?

Question 2

Which of the following is true of fiscal policy before the Great Depression of the 1930s?
 a. Fiscal policy was made at the federal level.
  b. Policies associated with national defense were made at the state level.
  c. Environmental degradation and education were the focus areas of the federal government while other areas of government policy were dealt by individual states.
  d. The federal budget was determined mostly by economists and not by politicians.
  e. National defense and foreign trade were the focus areas of the federal government while other areas of government policy were dealt by individual states.

[flexer1n1]

Answer to Question 1

Important factors that determine investment behavior are optimism, profits, interest rates, capital stock utilization rates, and inventories. Changes that increase investment lead to an increase in aggregate demand. Changes that decrease investment expenditures decrease aggregate demand.

Answer to Question 2

e