Figure 4-4

-In Figure 4-4 above,if the interest rate falls from 10% to 7.5% and this causes businesses to become more optimistic about future investment conditions,we would observe that planned investment would
A)decrease from B to C to D.
B)increase from B to C to D.
C)increase from B to C to F.
D)decrease from B to C to F.

Question

Figure 4-4
 
-In Figure 4-4 above,if the interest rate falls from 10% to 7.5% and this causes businesses to become more optimistic about future investment conditions,we would observe that planned investment would
A)decrease from B to C to D. 
B)increase from B to C to D. 
C)increase from B to C to F. 
D)decrease from B to C to F.

Quizplus · Accepted Answer

A fall in interest rates generally makes borrowing cheaper, encouraging businesses to invest more. If businesses also become more optimistic, this further boosts investment, leading to an increase from B to C to F.

Figure 4-4 -In Figure 4-4 Above,if the Interest Rate Falls from 10