Imagine an investment demand curve that shows that, if the market interest rate is 4 percent, the quantity of investment demanded is $500 billion. Then, if the market rate rises to 5 percent, the most likely result is that the quantity of investment demanded
A)does not change
B)rises
C)declines
D)rises then falls
E)It is not possible to answer without seeing the actual curve

Question

Quizplus · Accepted Answer

As the market interest rate rises to 5 percent, it becomes more costly for businesses to finance their investments, reducing their willingness to invest. So, the quantity of investment demanded is most likely to decline.

Imagine an Investment Demand Curve That Shows That, If the Market