A falling interest rate ________ the number of investment projects having a positive profit rate,and thus ________ the amount of output that firms demand for themselves.
A)increases,raises
B)increases,lowers
C)decreases,raises
D)decreases,lower

Question

Quizplus · Accepted Answer

Falling interest rates reduce the cost of borrowing, making more investment projects financially viable (with a positive profit rate), which in turn increases the demand for output as firms expand or initiate new projects.

A Falling Interest Rate ________ the Number of Investment Projects