Final answer:
An official forecast of a downturn in the economy is most likely to lead to a fall in the level of investment spending, as businesses will anticipate lower future profits and may reduce their investments accordingly.
Step-by-step explanation:
To identify which scenario is likely to lead to a fall in the level of investment spending, various economic factors need to be considered. The options given present different economic conditions that could influence investment decisions:
- A rise in interest rates typically makes borrowing more expensive, which can discourage investment. However, increased optimism about future demand could counteract this effect to some extent.
- An easing of monetary policy by the central bank usually leads to lower interest rates and is designed to encourage investment.
- An official forecast of a downturn in the economy would likely lead to reduced investment as businesses anticipate lower future profits.
- A rise in the expected rate of profit would tend to increase investment.
Therefore, the scenario most likely to lead to a fall in the level of investment spending is (c) an official forecast of a downturn in the economy.