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Suppose that consumption decreases. What is the effect on investment and real interest rate? Analyze using graphs. Briefly describe.

Sagot :

abundoariane93

Answer:

Interest rates and investment

If interest rates are increased then it will tend to discourage investment because investment has a higher opportunity cost. With higher rates, it is more expensive to borrow money from a bank. Saving money in a bank gives a higher rate of return.

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