Less of society's resources will be channeled into capital when
A)interest rates are high
B)households decide to save more of their income
C)businesspeople have optimistic expectations about the future
D)aggregate income increases
E)the nation is running a trade deficit

Question

Quizplus · Accepted Answer

High interest rates increase the cost of borrowing, which discourages investment in capital, leading to fewer resources being allocated to capital formation.

Less of Society's Resources Will Be Channeled into Capital When