Question

What effect do low interest rates have on business investment?


They do not have much effect on essential investment.


They encourage it.


They slow it down.


They generally stop it completely.

Answer 1

B they encourage it

THANKS!!

Answer 2

The correct answer is: "They encourage it".

The interest rate is the price charged by financial institutions for borrowed funds. If such price decreases, the amount of borrowed funds that investors are willing to demand increases (inverse relationship of price and quantity demanded). Therefore, such positive conditions, boost the willingness to invest of economic agents, including businesses.