The investment function is represented by
A) an inverse relationship between the interest rate and the value of planned investment.
B) the direct relationship between the interest rate and the value of planned investment.
C) the direct relationship between planned investment and real GDP (gross domestic product).
D) the inverse relationship between planned investment and unplanned investment.

Question

Quizplus · Accepted Answer

The investment function typically shows an inverse relationship between the interest rate and the value of planned investment. This is because higher interest rates make borrowing more expensive, which can reduce the amount of investment businesses are willing to undertake.

The Investment Function Is Represented by