Investment spending is
A) directly related to the interest rate.
B) inversely related to the interest rate.
C) directly related to real disposable income.
D) inversely related to real disposable income.

Question

Quizplus · Accepted Answer

Investment spending is inversely related to the interest rate because as interest rates increase, the cost of borrowing money for investment purposes also increases, leading to a decrease in investment spending. Conversely, when interest rates decrease, investment spending tends to increase.

Investment Spending Is