This question asked for a discussion of why the Board might have decided to limit the funds available for investment. Some answers appeared to rely more on imagination than on an understanding of soft capital rationing.

No credit was given for discussion of hard capital rationing, as the question asked for a discussion of why the directors, not providers of finance, had decided to limit the funds for investment. 
It is helpful to remember that capital rationing means that shareholder wealth is not being maximised, at least theoretically. Better answers therefore considered why the Board of the company:

• had decided against seeking additional finance, whether by equity or debt; 
• had decided not to follow a strategy of rapid expansion by accepting all investments with a positive NPV; 
• had chosen to create in internal market for capital funds.

Some answers discussed factors that would have been considered during the capital investment appraisal process, such as expectations about future economic variables (interest rates, taxation, inflation, costs of capital) and future economic conditions.