When interest rates fall, land values
A) Increase because the profitability of land is inversely related to interest rates.
B) Increase because the profitability of land is directly related to interest rates.
C) Decrease because the profitability of land is inversely related to interest rates.
D) Decrease because the profitability of land is directly related to interest rates.

Question

Quizplus · Accepted Answer

Land values tend to increase when interest rates fall because the cost of borrowing money becomes cheaper, making investments in land more attractive. This relationship indicates that the profitability of land is inversely related to interest rates.

When Interest Rates Fall, Land Values