If the interest rate increases, then the:
A)economy will move to a new point along the existing consumption function.
B)consumption function will shift upward.
C)investment demand curve will shift downward.
D)investment demand curve will shift upward.
E)economy will move to a new point along the existing investment demand curve.

Question

Quizplus · Accepted Answer

An increase in interest rates typically makes borrowing more expensive, leading to a decrease in investment demand, which causes the investment demand curve to shift downward.

If the Interest Rate Increases, Then The