The Reason Business Investment Is Sensitive to Interest Rates Is

question 64

Multiple Choice

The reason business investment is sensitive to interest rates is that

• A) interest rates are a lagging indicator, so they signal to firms the state of the economy.
• B) most funds used for investment are borrowed, so firms incur an interest charge.
• C) interest rates indicate how aggressive government policy is about fighting recessions.
• D) firms charge interest on any investment they make.

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