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Briefly explain how each of the following would affect investment: Consumer Demand If consumer demand increases, businesses

will increase investments to increase its size of production in order to meet consumers needs Business investments and activities increase during pea# and recovery periods and decrease during trough and recession periods If governments policies favor businesses, such as tax cut or access to more resources, it is more li#ely for businesses to increase their investments If the uncertainty about operation or mar#et is great, businesses will not invest a lot If price is set that the business is unable to cover their production costs, they will not increase investment &lso, price controls means theres government interference 'abour unrest leads to decrease for business investments Businesses have to first control their wor#ers for production (oreign competition reduces businesses investments Imports from other countries will compete for target mar#et with local businesses )igh production costs will not lead businesses to invest more money, since they have to be able to cover greater amount of expenses )igh tax rate reduces business investments *ax cut leads to greater investments

!hase of the "conomy

$overnment !olicy


!rice Controls

'abour unrest

(oreign Competition

!roduction costs


Interest rates

Interest rate low results businesses to borrow more money which leads to increase in investments