Other things being equal, higher real interest rates tend to
A)increase every component of desired investment expenditure.
B)reduce every component of desired investment expenditure.
C)reduce every component of desired investment expenditure except plant and equipment.
D)reduce every component of desired investment expenditure except residential housing.
E)reduce every component of desired investment expenditure except inventories.

Question

Quizplus · Accepted Answer

Higher real interest rates make borrowing more expensive, which reduces investment spending across the board.

Other Things Being Equal, Higher Real Interest Rates Tend to