If the stock market booms and people feel wealthier (in a closed economy),then the real interest rate ________ and investment ________.

Question

Quizplus · Accepted Answer

In a closed economy, if the stock market booms and people feel wealthier, they are likely to save less and spend more, increasing the demand for goods and services. This can lead to higher interest rates as the demand for funds to invest increases. Higher interest rates can make borrowing more expensive, potentially leading to a decline in investment.

If the Stock Market Booms and People Feel Wealthier (In