3.7 - role of expectations of firms & business confidence (aggregate demand)
Studied by 0 people
Call with Kai
Knowt Play
Learn
Practice Test
Spaced Repetition
Match
Flashcards1/4
There's no tags or description
Looks like no tags are added yet.
Name | Mastery | Learn | Test | Matching | Spaced |
|---|
No study sessions yet.
5 Terms
how do firms’ expectations and confidence affect the economy?
can affect investment into big capital projects (the firms can expand domestically/internationally becoming an MNC)
can affect unemployment/stock levels
how do firms decide whether or not to spend on investment?
demand + price of output generated from investment
does investment decrease cost of production?
having more revenue streams due to higher demand boosts profits
factors affecting the extent that firms invest: means of financing investment
low interest rates means more investment (via loans)
retained profit is higher, causes more investment
factors affecting the extent that firms invest: government policies
spending more on infrastructure increases investing confidence - theres more mobility (how firms/workers move)
e.g. HS2
factors affecting the extent that firms invest: competitive fundamentals of industry
investment depends on having the best product (specific capital)
e.g. investing in robotics in a developing country
Note 
Flashcards (250)