In which of the following situations does investment spending increase?
A)when the price level rises, causing interest rates to rise
B)when the price level rises, causing interest rates to fall
C)when the price level falls, causing interest rates to rise
D)when the price level falls, causing interest rates to fall

Question

Quizplus · Accepted Answer

When the price level falls, there is generally a decrease in interest rates, making it cheaper for businesses to borrow money and invest in capital goods, leading to an increase in investment spending.

In Which of the Following Situations Does Investment Spending Increase