Consumption is less sensitive than investment to changes in the real interest rate.

Name: Consumption is less sensitive than investment to changes in the real interest rate.
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Question

Quizplus · Accepted Answer

This is generally true. Consumption is more linked to current income levels and is less likely to be affected by fluctuations in interest rates. On the other hand, investment decisions are more sensitive to changes in the cost of borrowing, as borrowing forms a significant part of investment decisions.

Consumption Is Less Sensitive Than Investment to Changes in the Real