Other things the same,when the interest rate rises,the present value of future revenues from investment projects
A)rises,so investment spending rises.
B)falls,so investment spending rises.
C)rises,so investment spending falls.
D)falls,so investment spending falls.

Question

Quizplus · Accepted Answer

When the interest rate rises, the present value of future revenues from investment projects falls because future cash flows are discounted at a higher rate. As a result, investment spending tends to decrease.

Other Things the Same,when the Interest Rate Rises,the Present Value