The Investment Function Reflects a Negative Relationship Between the Quantity

question 37

Multiple Choice

The investment function reflects a negative relationship between the quantity of investment and the interest rate because

• A) high interest rates make the borrowing that some require to finance investment too expensive relative to the potential return.
• B) high interest rates make the opportunity cost of foregoing an interest rate return on funds in lieu of financing an investment too high.
• C) low interest rates mean that more investment projects are available that pay the superior returns financiers are looking for.
• D) all of the above.
• E) none of the above.