Which of the following is likely to increase investment in an economy?
A)A decreased demand for investment goods
B)A fall in the real interest rate
C)A rise in the real interest rate
D)An increase in business tax
E)A surplus of goods and services

Question

Quizplus · Accepted Answer

A fall in the real interest rate makes borrowing cheaper and reduces the opportunity cost of investing funds, which makes investment more attractive to businesses. Therefore, it is likely to increase investment in the economy. The other options are likely to have the opposite effect and decrease investment.

Which of the Following Is Likely to Increase Investment in an Economy