Question

use the interactive graph to illustrate the effects of a rise in investor confidence. next, move point e to the new equilibrium. interest rate saving and investment demand supply e select the answer that best describes the new equilibrium. the interest rate and the level of investment increased. the interest rate increased, but investment decreased. the interest rate and the level of investment decreased. the interest rate decreased, but investment increased. what is true of the new equilibrium? dollars saved

Answer 1

When there is a rise in investor confidence, it leads to an increase in both interest rates and the level of investment. This is because confident investors are more willing to invest their money, which increases the demand for financial capital.

Step-by-step explanation:

When there is a rise in investor confidence, it will lead to an increase in both interest rates and the level of investment. This is because confident investors are more willing to invest their money, leading to an increase in demand for financial capital. As the demand for financial capital increases, the interest rates will go up as well, as lenders are able to charge higher interest rates when there is high demand.

Furthermore, the level of investment will also increase because more investors are willing to invest in various projects and businesses. This can lead to economic growth and expansion, as more capital is available for businesses to expand their operations and hire more workers.