Which of the following statements is true?
A) There is a direct relationship between investment and the interest rate.
B) There is an inverse relationship between investment and the interest rate.
C) There is no relationship between investment and the interest rate.
D) Investment is always less than savings.

Question

Quizplus · Accepted Answer

There is an inverse relationship between investment and the interest rate. When interest rates increase, the cost of borrowing increases, which makes it more expensive for businesses to invest. As a result, there is a decrease in investment. Conversely, when interest rates decrease, it becomes cheaper for businesses to borrow and invest, resulting in an increase in investment.

Which of the Following Statements Is True