Given the expected rate of return on all possible investment opportunities in the economy, a(n)
A)increase in the real rate of interest will tend to increase the level of investment.
B)decrease in the real rate of interest will tend to increase the level of investment.
C)decrease in the real rate of interest will tend to decrease the level of investment.
D)change in the real interest rate will have no impact on the level of investment.

Question

Quizplus · Accepted Answer

A decrease in the real rate of interest reduces the cost of borrowing, making investments more attractive, thus increasing the level of investment.

Given the Expected Rate of Return on All Possible Investment