As the interest rate rises,the cost of a given investment project __________ and businesses invest __________.
A) rises; more
B) rises; less
C) falls; more
D) falls; less

Question

Quizplus · Accepted Answer

When interest rates rise, the cost of borrowing money also increases, making it more expensive for businesses to take on new investment projects. As a result, businesses will likely invest less as the cost of borrowing money becomes prohibitively high. Therefore, the correct choice is B - rises; less.

As the Interest Rate Rises,the Cost of a Given Investment