Business, 25.03.2021 18:00 michael3677
How does the opportunity cost principle explain the relationship between the real interest rate and investment spending? As the interest rate rises, the more attractive it is to leave money in the bank instead of spending on investments. it has no effect on investment spending. If firms need to expand, they will invest regardless of the interest rate. the more spending businesses want to do. the less attractive it is to leave money in the bank instead of spending on investments. b. The investment line is because of the relationship between real interest rates and investment spending.
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