When market interest rates go up investors demand ________ returns on other types of investments and when market interest rates go down,the return investors demand on other types of investments ________.
A)lower;goes down
B)higher;goes down
C)lower;goes up
D)higher return;goes up

Question

Quizplus · Accepted Answer

When market interest rates go up, investors demand higher returns on other types of investments because they can earn a higher rate of return elsewhere. Conversely, when market interest rates go down, the return investors demand on other types of investments goes down because they cannot earn a higher rate of return elsewhere. Therefore, the correct option is B - higher; goes down.

When Market Interest Rates Go Up Investors Demand ________ Returns