Which of the following is most sensitive to monetary policy?
A)Government expenditure
B)Consumption spending
C)Utility spending
D)Investment spending

Question

Quizplus · Accepted Answer

Investment spending is most sensitive to monetary policy because changes in interest rates can significantly affect the cost of borrowing for investments. When interest rates decrease, it becomes cheaper for businesses to borrow money for investments, leading to an increase in investment spending. On the other hand, when interest rates increase, it becomes more expensive to borrow money, leading to a decrease in investment spending.

Which of the Following Is Most Sensitive to Monetary Policy