Optimistic Outlook on Future Sales and Profits: Effects and Implications

Business Decision Makers' Optimism and its Impact on Sales and Profits

Prev Question Next Question

Question

If business decision makers suddenly become more optimistic about future sales and profits, which of the following will most likely occur?

Answers

A. The interest rate will fall, causing both investment and GDP to rise.

B. Income will increase and actual saving will remain constant.

C. Actual investment will increase but consumption will decrease, leaving GDP unchanged.

D. Investment will increase, causing both aggregate demand and GDP to increase.

Show Answer

Explanations

Click on the arrows to vote for the correct answer

A. B. C. D.

If business decision makers are optimistic about the future, they will increase their private investment and stimulate other parts of the economy. Thus, aggregate demand and aggregate output will increase.

Prev Question Next Question