The relationship between planned real investment spending and the interest rate is
A) inverse.
B) direct.
C) constant.
D) positive.

Question

Quizplus · Accepted Answer

The relationship between planned real investment spending and the interest rate is inverse. This means that as the interest rate goes up, planned real investment spending goes down, and vice versa. This is because higher interest rates increase the cost of borrowing, which makes it less attractive for firms to invest in new projects. Lower interest rates, on the other hand, make it cheaper to borrow, which can encourage investment.

The Relationship Between Planned Real Investment Spending and the Interest