A rise in interest rates will cause
A)A decline in investment spending.
B)A rise in investment spending.
C)Investment spending to remain constant.
D)Investment spending to be eliminated from the economy.

Question

Quizplus · Accepted Answer

When interest rates rise, borrowing becomes more expensive, which in turn reduces investment spending since businesses have to pay more to finance purchases or expansions. As a result, investment spending tends to decline.

A Rise in Interest Rates Will Cause