Question

When market interest rates go up investors demand ________ returns on other types of investments and when market interest rates go down, the return investors demand on other types of investments ________.

Answer 1

higher

goes down

Step-by-step explanation:

Investors make rational decisions. they compare the return of different options available and goes for the higher one if the risk is considered to be constant.

As the Market Interest rate increase the other investment option become more attractive because it pays higher returns, so the demand of other types of investment goes up rates than before.

As the Market Interest rate goes down the other investment option become less attractive because it pays lower returns, so the demand of other types of investment goes down rates than before.