A lower interest rate makes more investment projects profitable, meaning that:
A)there is a direct relationship between the rate of interest and the quantity of investment spending.
B)there is an inverse relationship between the rate of interest and the quantity of investment spending.
C)there is no relationship between the rate of interest and the quantity of investment spending.
D)the demand curve for investment spending is horizontal.
E)the demand curve for investment spending is vertical.

Question

Quizplus · Accepted Answer

Lower interest rates reduce the cost of borrowing, encouraging more investment projects, thus increasing investment spending.

A Lower Interest Rate Makes More Investment Projects Profitable, Meaning