Answer:
c. Investment spending by businesses varies inversely with the interest rate.
Explanation:
The relationship described in the question is known as inverse or negative relationship.
An inverse relationship occurs when two variables move in the opposite direction. That is, as variable A increase, variable B decreases. Conversely, as variable A decreases, variable B increases. This different from a positive relationship which occurs when two variables move in the same direction. That is, as variable A increase, variable B too increases. Conversely, as variable A decreases, variable B also decreases.
From the question, a continuous increase in total investment by $10 billion as the interest rate falls successively by 4 percentage point is an example of an inverse or negative relationship. From this, it can also be inferred that total investment will continue to fall by $10 billion as the interest rate rises successfully by 4 percentage point.
Therefore, the verbal statement that "investment spending by businesses varies inversely with the interest rate" is an accurate description of the relationship between the investment and the interest rate.
All the best.
