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Colt1911 [192]
3 years ago
8

Suppose that for each one-percentage-point increase in the interest rate, the level of investment spending declines by $1 billio

n. the change in the interest rate (according to the change you made to the money market in the previous scenario) therefore causes the level of investment spending to by .
Business
1 answer:
elixir [45]3 years ago
5 0

Answer:

We expect investment spending to increase by $ 1 billion

Explanation:

If investment decreases by $ 1 billion if a 1 % change is made then that is sensitivity of investment to change in interest rate. Thus if there is a 1 % reduction in interest rate we expect to see a $ 1 billion increase in spending if this holds true.

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