In the classical model,investment spending is
A) positively related to the level of income
B) positively related to the interest rate
C) negatively related to the interest rate
D) unrelated to the interest rate
E) negatively related to the price level

Question

Quizplus · Accepted Answer

In the classical model, investment spending is negatively related to the interest rate because higher interest rates increase the cost of borrowing, which can discourage investment.

In the Classical Model,investment Spending Is