Governments seeking to boost investment spending
A) can try to induce the country's central bank to raise real interest rates.
B) can try to induce the country's central bank to lower real interest rates.
C) can try to encourage expenditures on imports.
D) can try to lower the baseline level of investment spending by encouraging private decision makers.

Question

Quizplus · Accepted Answer

Lowering real interest rates can make borrowing cheaper for businesses, encouraging them to invest more in projects and expansion efforts, thus boosting investment spending. Higher interest rates typically discourage borrowing and investment.

Governments Seeking to Boost Investment Spending