Question

As capital investment levels off business spending decreases and leads to a possible contraction to the economy. True or False?

Answer 1

TRUE

Step-by-step explanation:

GDP counts consumption, investments, public spending and trade balance. All of these variables affect economic activity. When capital investment decreases, it means that less money will circulate in the economy, which represents a decrease in economic transactions and consequently leads to a cooling of the economy and GDP. An economy with a drop in investment is a recessive bias economy!

Answer 2

It is a true statement that as capital investment levels off business spending decreases and leads to a possible contraction to the economy. The correct option among all the options that are given in the question is the first option. I hope that this is the answer that has actually come to your help.