In which situation 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, it causes interest rates to fall as well. Lower interest rates make investment spending more attractive, leading to an increase in investment spending.

In Which Situation Does Investment Spending Increase