Planned investment spending is higher
A)when real interest rate is higher.
B)during financial frictions.
C)when businesses are optimistic.
D)all of the above.
E)A and C.

Question

Quizplus · Accepted Answer

Planned investment spending is higher when businesses are optimistic about the future, as they are more likely to invest in new projects and expansion. High real interest rates typically discourage investment because borrowing costs are higher, and financial frictions, which can include issues like credit constraints or market inefficiencies, also tend to reduce investment spending.

Planned Investment Spending Is Higher