There is a negative relationship between the real rate of interest and investment spending.

Question

Quizplus · Accepted Answer

When the real rate of interest decreases, the cost of borrowing decreases and investment spending tends to increase. On the other hand, when the real rate of interest increases, the cost of borrowing increases, thereby discouraging investment spending. Therefore, there is an inverse or negative relationship between the real rate of interest and investment spending.

There Is a Negative Relationship Between the Real Rate of Interest