Question

Suppose that for each one-percentage-point increase in the interest rate, the level of investment spending declines by $0.5 billion. 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 torise by .

Answer 1

Answer:

fall & $0.5 billion

Explanation:

Base on the scenario been described in the question, we can see that for each one percentage point increase in the interest rate, the level of spending investment is declining by $0.5 billion. For this reason it will make the investment spending to fall by $0.5 billion when the interest rate changes as we have seen in the first interest rate calculated.