Asked by Schyler Molloy on Jul 15, 2024
Verified
An increase in the interest rate,other things constant,decreases the amount of investment spending.
Interest Rate
The cost of borrowing money, usually expressed as a percentage of the total amount loaned.
Investment Spending
Expenditures on new physical assets like machinery, buildings, or infrastructure, intended to increase productive capacity.
- Understand the impact of interest rates on investment spending and consumption.
Verified Answer
AB
Adriana BoskovskiJul 17, 2024
Final Answer :
True
Explanation :
An increase in the interest rate increases the cost of borrowing, reducing the profitability of investments and leading to a decrease in investment spending.
Learning Objectives
- Understand the impact of interest rates on investment spending and consumption.