If planned investment is perfectly responsive to changes in the interest rate, the planned investment schedule
A) has a negative slope.
B) is horizontal.
C) is vertical.
D) has a positive slope.

Question

Quizplus · Accepted Answer

If planned investment is perfectly responsive to changes in the interest rate, it means that any change in the interest rate does not affect the level of planned investment. Therefore, the planned investment schedule is horizontal, indicating that investment does not change as interest rates change.

If Planned Investment Is Perfectly Responsive to Changes in the Interest