Determinant of the level of business investment spending

Assignment Help Business Economics

Reference no: EM131113100

Business investment spending represents spending by businesses on new plants, factories, equipment, technologies, etc. According to economic theory, the primary determinant of the level of business investment spending is the level of real interest rates. The Federal Reserve in 2008 reduced interest rates effectively to zero. Business investment spending, however, collapsed, declining as much as 25% annually over the next two years. How would you resolve this seeming paradox of rock-bottom interest rates and a collapse in business investment spending? Please briefly explain.

Reference no: EM131113100

Questions Cloud

Cigarette consumption and consumer spending : Suppose Congress, influenced by studies linking cigarette smoking to cancer, plans to raise the excise tax on cigarettes so the price rises by 10%. Estimate the effect the price increase will have on cigarette consumption and consumer spending on..

What considerations might limit the extent : What considerations might limit the extent to which the theory of comparative advantage is realistic?

Which of following items a vacation package for spring break : Currently, there is a great deal of debate about the future impact of the Internet on retailing. Which of the following items a vacation package for spring break, a wedding gift for a friend, a pair of jeans for yourself, or an end table for your ..

What is the effect of trade discounts on sales revenues : What is the effect of trade discounts on sales revenues and accounts receivable? Why?

Determinant of the level of business investment spending : Business investment spending represents spending by businesses on new plants, factories, equipment, technologies, etc. According to economic theory, the primary determinant of the level of business investment spending is the level of real interest ra..

How the organism has adapted to survive : Identify the structures and functions of the main organs found in your selected organism and Would the organism survive in this new environment?

Use to improve the value they provide to customers : In a paragraph or two, outline two tactics that businesses can use to improve the value they provide to customers. List and briefly describe four activities that a company might undertake in the formation of an online business initiative.

Do you find their sales practices to be ethical : Did you believe the retailer is sacrificing revenue for you the consumers' benefit? Why or Why not? Do you find their sales practices to be ethical and beneficial to the consumer or perhaps unethical and misleading?

Compute the elasticities for each independent variable : Using the formula and information given, first calculate the Q Q = -5,200 – 42(500) + 20(600) + 5.2(5,500) + 0.20(10,000) + 0.25(5,000) = Now we can compute the elasticities for each independent variable: ED = ∂QD/∂P * P/QD = – 42 * 500/Q (what you c..

User Account

All Pages