Asked by Elizabeth Candelmo on May 13, 2024
Verified
The higher the opportunity cost of borrowing,the higher the amount of investment,other things constant.
Opportunity Cost
The penalty of bypassing the alternative that ranks second in preference while making a choice.
Investment
The process of distributing funds with the aim of earning returns or profits.
- Acquire knowledge on how interest rates affect spending in investments and consumption.
Verified Answer
KA
Krystle ArcherMay 19, 2024
Final Answer :
False
Explanation :
The higher the opportunity cost of borrowing, the higher the cost of borrowing, making investment more expensive. Therefore, other things constant, the amount of investment would decrease.
Learning Objectives
- Acquire knowledge on how interest rates affect spending in investments and consumption.