Ceteris paribus,the real interest rate and the level of planned investment are:

Question

Quizplus · Accepted Answer

The real interest rate and the level of planned investment are inversely related. This is because as the real interest rate increases, the cost of borrowing money to finance investment projects increases, which leads to a decrease in the level of planned investment. Conversely, as the real interest rate decreases, the cost of borrowing money to finance investment projects decreases, which leads to an increase in the level of planned investment. Ceteris paribus means that all other factors are held constant, so this relationship holds true under those conditions.

Ceteris Paribus,the Real Interest Rate and the Level of Planned