Question

Use the information in the following table to answer the next question. In the table, investment...

Use the information in the following table to answer the next question. In the table, investment is in billions.

(1) Interest Rate

4%

5

6

7

8

(2) Investment (billions of dollars)

$100

90

80

70

60

(3) Investment (billions of dollars)

$80

70

60

50

40

Suppose the Fed increases the interest rate from 5 to 6%. As a result of this increase in the interest rate, using column (2) investment will ____.

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Answer #1

Column 2 shows that when interest rate increases from 5% to 6%, investment decreases from $90 billion to $80 billion.

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