An increase in the market interest rate,other things equal,will _____.
A)have no effect on investment
B)increase the amount invested since the rate of return will be lower
C)increase the amount invested because income will increase
D)reduce the amount invested because the opportunity costs of investing will be higher
E)increase the amount invested because the rate of return will be higher

Question

Quizplus · Accepted Answer

An increase in the market interest rate will increase the opportunity costs of investing, making other investments outside of the market more attractive. Therefore, investors may reduce the amount invested in the market.

An Increase in the Market Interest Rate,other Things Equal,will _____