In the neoclassical view of the macroeconomy, investment spending is
A) unrelated to the interest rate.
B) inversely related to the interest rate.
C) positively related to the interest rate.
D) completely unpredictable.

Question

Quizplus · Accepted Answer

In the neoclassical view, investment spending is inversely related to the interest rate. This means that as interest rates decrease, investment spending increases, and vice versa. This is because lower interest rates make borrowing cheaper, encouraging businesses to invest in new projects and equipment.

In the Neoclassical View of the Macroeconomy, Investment Spending Is