The demand for funds resulting from business investment in short-term assets is ____ related to the number of projects implemented, and is therefore ____ related to the interest rate.
A) inversely; positively
B) positively; inversely
C) inversely; inversely
D) positively; positively

Question

Quizplus · Accepted Answer

When businesses implement more projects and invest in short-term assets, they will require more funds which will positively affect the demand for funds. However, when the demand for funds increases, the interest rates tend to go up too. Therefore, the relationship between demand for funds resulting from business investment in short-term assets and the interest rate is inverse.

The Demand for Funds Resulting from Business Investment in Short-Term