According to classical economists,the relationship between the amount of funds firms invest and the interest rate is
A) direct.
B) inverse.
C) indirect.
D) independent.

Question

Quizplus · Accepted Answer

According to classical economists, the relationship between the amount of funds firms invest and the interest rate is inverse. This means that as interest rates increase, the amount of funds firms are willing to invest decreases, and vice versa. This is because higher interest rates increase the cost of borrowing, which discourages firms from investing. On the other hand, lower interest rates make borrowing cheaper, which encourages firms to invest more.

According to Classical Economists,the Relationship Between the Amount of Funds