Final answer:
Investments in information technology can lead to superior returns, as evidenced by the high rates of return during the late 1990s tech boom. However, there is inherent risk, and returns are never guaranteed, as seen during the 2008 and 2009 Great Recession.
Step-by-step explanation:
Investments in information technology can result in superior returns. This is illustrated by historical examples, such as the technology boom of the late 1990s, where businesses experienced high rates of return on IT investments, leading to a significant shift in the demand for financial capital to the right. Similarly, during times of economic downturn, such as the 2008 and 2009 Great Recession, we observe the opposite effect, with demand shifting to the left as confidence in technology investments wanes.
It is important to recognize that investments always entail some degree of risk. For instance, over a long period, stocks might bring higher average returns than bonds, but they are subject to greater volatility, as seen by the swings in the S&P 500 index during 2008 and 2009. Consequently, while IT investments can lead to superior returns, there is no guarantee, and they can also lead to financial instability in certain scenarios.