ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -If business confidence is high, then firms tend to spend more on investment, believing that the future payoff from that investment will be substantial. Conversely, if consumer or business confidence drops, then consumption and investment spending decline.

Detailed explanation-2: -Our findings suggest that the OOS test results are similar to the in-sample test results. While, as we found, business confidence has predictive power for total investment, it may also contain additional information on the trajectory of investment as captured by downturns and directional changes.

Detailed explanation-3: -Investor sentiment or confidence can cause the market to go up or down, which can cause stock prices to rise or fall. The general direction that the stock market takes can affect the value of a stock: bull market – a strong stock market where stock prices are rising and investor confidence is growing.

Detailed explanation-4: -It can be used to monitor output growth and to anticipate turning points in economic activity. Numbers above 100 suggest an increased confidence in near future business performance, and numbers below 100 indicate pessimism towards future performance.