Final answer:
The relationship between interest rates and the quantity of investment conforms to the law of demand.
Step-by-step explanation:
The relationship between interest rates and the quantity of investment conforms to the law of demand.
According to the law of demand, when the interest rate rises, the quantity of investment demanded by consumers decreases. This is because higher interest rates make borrowing more expensive, discouraging consumers from taking out loans to invest in projects or purchases.
Conversely, when the interest rate falls, the quantity of investment demanded increases as borrowing becomes cheaper, and consumers are more willing to take out loans to invest.