The interest rate most relevant to determining investment spending
A) is the short-term, nominal, risk-free interest rate.
B) is the long-term, nominal, risky interest rate.
C) is the short-term, real, risky interest rate.
D) is the long-term, real, risky interest rate.

Question

Quizplus · Accepted Answer

The long-term, real, risky interest rate is most relevant for determining investment spending because it reflects the true cost of borrowing for investment purposes over time, accounting for inflation and risk.

The Interest Rate Most Relevant to Determining Investment Spending