The more liquid markets are:
A)the lower the interest rates,and the higher the amount of investment.
B)the lower the interest rates,and the lower the amount of investment.
C)the higher the interest rates,and the higher the amount of investment.
D)the higher the interest rates,and the lower the amount of investment.

Question

Quizplus · Accepted Answer

Liquid markets refer to markets where there is high trading activity and low transaction costs. Investors prefer such markets as they are able to buy and sell assets quickly and easily, which increases the amount of investment. The higher demand for assets in liquid markets pushes down interest rates as the cost of borrowing decreases. Hence, the correct option is A - the lower the interest rates, the higher the amount of investment in liquid markets.

The More Liquid Markets Are