Question

When an economy is experiencing higher real interest rates, business firms will most likely be discouraged from investing in:

Answer 1

Answer: specialized service

Explanation:

An economy experiencing high interest rates will have to reduce investment generally, BECAUSE higher rates increase the BORROWING and demands that ONLY investments with prospect of HIGHER RETURNS (i.e PROFITABLE) should be considered.

Thus, all options are profitable EXCEPT specialized services, as they would be considered a luxury (too costly)