An Increase in the Interest Rate Will

question 123

Multiple Choice

An increase in the interest rate will

• A) shift the investment demand curve to the right.
• B) shift the investment demand curve to the left.
• C) not shift the investment demand curve.
• D) increase the amount of investment undertaken by businesses.

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Definitions:

Year

A period of time consisting of 365 days, or 366 in a leap year, used as a measure of time for calendars, age, and time intervals.

Sponsor

An entity or individual that supports an event, activity, person, or organization financially or through the provision of products or services.

Geometric Average Rate

The average compound return per period over a time span, useful for comparing different investments or portfolios.

Compounding

The process where the value of an investment increases because the earnings on an investment, both capital gains and interest, earn interest as time passes.