Question

because business firms often finance new investments with borrowed money, a key determinant of investment spending is a. the rate of inflation. b. the price level. c. tax rates. d. the real interest rate.

Answer 1

Option d: the real interest rate.

Step-by-step explanation:

Important investment expenditures are determine by interest rates, expectations, wealth, capital prices and some others while the four main determinants of​ investmen are Expectations of future​ profitability, interest​ rates, taxes and cash flow.

An Investment is simply an increase in capital assets which comprises of investment by business/government and also an investment in property.

Investment has a good relations to interest rates.Investment is inversely connected to interest rates because if interest rates rise, the opportunity cost of investment also rises and also if interest rates rise, firms may want consumers to limit their spending, and the investment benefits will not hold or be lost.