Table 14-1

-Refer to Table 14-1. If the market interest rate falls from 15% to 11%, what happens to the quantity of investment demanded?

Question

Table 14-1
 
-Refer to Table 14-1. If the market interest rate falls from 15% to 11%, what happens to the quantity of investment demanded?

Quizplus · Accepted Answer

According to the table, at an interest rate of 15%, the quantity of investment demanded is $5,500. However, when the interest rate falls to 11%, the quantity of investment demanded increases to $7,700. This is because at lower interest rates, investment becomes more profitable, and firms increase their demand for investment. Thus, the quantity of investment demanded increases by $2,200.

Table 14-1 -Refer to Table 14-1. If the Market Interest Rate Falls