The level of investment will tend to rise if the capacity utilization rate is ____________ and the interest rate is ______________.

Question

Quizplus · Accepted Answer

When the capacity utilization rate is high, businesses have higher profits and therefore have more funds available for investment. Additionally, with a low-interest rate, borrowing is cheaper, and businesses are more willing to take on debt to finance investments. This combination of high capacity utilization and low-interest rates creates a conducive environment for investment to increase.

The Level of Investment Will Tend to Rise If the Capacity