The relationship between planned real investment spending and the interest rate is
A)inverse.
B)direct.
C)constant.
D)highly volatile.

Question

Quizplus · Accepted Answer

The relationship between planned real investment spending and interest rates is inverse. As interest rates increase, the cost of borrowing money to invest in capital goods increases, discouraging firms from investing. Conversely, as interest rates decrease, borrowing costs are lower, making investment more attractive. Therefore, investment spending tends to rise as interest rates fall and vice versa.

The Relationship Between Planned Real Investment Spending and the Interest