When interest rates fall,land values
A)Increase because the profitability of land is inversely related to interest rates.
B)Increase because the profitability of land is directly related to interest rates.
C)Decrease because the profitability of land is inversely related to interest rates.

Question

Quizplus · Accepted Answer

As interest rates fall, borrowing becomes cheaper and investors are more likely to buy land for development or investment purposes, leading to an increase in demand and ultimately driving up land values. This is because the profitability of land is inversely related to interest rates – as interest rates decrease, the return on investment in land becomes relatively more attractive.

When Interest Rates Fall,land Values