Final answer:
Planned investment spending primarily depends on expectations of future profits, the market interest rate, and the broader economic climate influenced by consumer wealth and credit conditions.
Step-by-step explanation:
Planned investment spending depends on several key factors that affect a firm's decision to invest. Notable among these are expectations of future profits, which have a substantial impact on investment decisions. If businesses anticipate economic growth and higher future profits, they're more likely to commit to new investments. Conversely, during economic downturns or recessions, businesses often pull back on investment due to lower profit expectations.
Another crucial factor influencing investment spending is the market interest rate. Interest rates affect the cost of borrowing money, which is a common way businesses fund new investments. Lower interest rates tend to stimulate investment spending as they reduce the cost of borrowing, whereas higher rates may deter it by increasing the cost.
Wealth or credit conditions of consumers also play a role in the broader economic climate that affects business investments. Increases in consumer wealth can increase aggregate demand, leading businesses to invest more to meet the higher demand for their products. Conversely, when consumer wealth declines, aggregate demand may fall, resulting in decreased business investment.