As interest rates rise, there will be fewer profitable projects that firms will be willing to invest in.

Question

Quizplus · Accepted Answer

When interest rates rise, borrowing money becomes more expensive for firms. This increases the cost of financing projects, making it less profitable to invest in new projects. As a result, firms will be more selective about which projects they are willing to invest in and there will likely be fewer investments overall.

As Interest Rates Rise, There Will Be Fewer Profitable Projects