A lower interest rate makes more investment projects feasible,meaning that:
A)there is a direct relationship between the rate of interest and the quantity of investment spending.
B)there is an inverse relationship between the rate of interest and the quantity of investment spending.
C)there is no relationship between the rate of interest and the quantity of investment spending.
D)the demand curve for investment spending is horizontal.
E)the demand curve for investment spending is vertical.

Question

Quizplus · Accepted Answer

A lower interest rate reduces the cost of borrowing, making more investment projects financially viable, thus increasing the quantity of investment spending. This indicates an inverse relationship.

A Lower Interest Rate Makes More Investment Projects Feasible,meaning That