There is a _____ relationship between the quantity of investment demanded and the rate of interest.

Question

Quizplus · Accepted Answer

According to the investment demand curve, as the interest rate increases, the quantity of investment demanded decreases. This negative or inverse relationship is due to the fact that as the cost of investment (the interest rate) increases, the expected return on investment decreases, and therefore, investment becomes less desirable.

There Is a _____ Relationship Between the Quantity of Investment