Changes in the interest rate are more likely to affect investment spending than consumer spending.

Question

Quizplus · Accepted Answer

Investment spending is more sensitive to changes in interest rates because higher interest rates increase the cost of borrowing and decrease the return on investment, making it less attractive for businesses to invest in new projects. Consumer spending, on the other hand, is generally less influenced by changes in interest rates as it is driven more by factors such as income, employment, and confidence in the economy.

Changes in the Interest Rate Are More Likely to Affect