- Report this article
Ashish Agarwal
Ashish Agarwal
Agile Coach, Scrum Master, Technology Evangelist, Blogger and Lifetime Learner
Published Mar 28, 2023
+ Follow
Interest Rate-Investment Relationship
The interest rate-investment relationship refers to the relationship between the interest rate and the level of investment in the economy. When interest rates are high, it becomes more expensive for businesses to borrow money to invest, which tends to reduce investment spending. Conversely, when interest rates are low, borrowing costs are lower, which encourages businesses to invest more.
Here is an example schedule illustrating the interest rate-investment relationship:
Assume that the interest rate in the economy is currently 8%.
From the above schedule, we can see that as interest rates rise from 6% to 10%, investment spending declines from $200 billion to $120 billion. This illustrates the negative relationship between interest rates and investment.
Shift in Investment Demand
Shifts in investment demand can be caused by various factors including:
Help improve contributions
Mark contributions as unhelpful if you find them irrelevant or not valuable to the article. This feedback is private to you and won’t be shared publicly.
Contribution hidden for you
This feedback is never shared publicly, we’ll use it to show better contributions to everyone.
Notes from MBA
Notes from MBA
1,167 follower
+ Subscribe
Like
Celebrate
Support
Love
Insightful
Funny
7
3 Comments
KRISHNAN N NARAYANAN
Sales Associate at American Airlines
1y
- Report this comment
Thanks for posting
1Reaction 2Reactions
Mohammad Khalifa Al Mheiri
Engineering Management 🌍 I help organizations achieve long-term💡 🌟Sharing Insights🚀
1y
- Report this comment
Great insights on the interest rate-investment relationship and the factors that influence investment demand, Ashish! Your clear explanation and the example schedule helped me understand the concept better. Thank you for sharing your knowledge and expertise in macroeconomics. Looking forward to reading more of your informative posts.
2Reactions 3Reactions
See more comments
To view or add a comment, sign in
More articles by this author
No more previous content
- Strategic Innovation - Asia-Oceania Technology Map Apr 6, 2024
- Navigating the Mind’s Maze: Understanding Biases in Decision Making Apr 5, 2024
- Strategic Innovation - Silicon Valley Apr 5, 2024
- Strategic Innovation - Unleashing Global Innovation and Entrepreneurship Apr 4, 2024
- Strategic Innovation - Embracing Interconnectedness and Adaptability Apr 3, 2024
- Strategic Innovation - Harnessing Diversity Apr 2, 2024
- Strategic Innovation - Unveiling the Path to Business Success Apr 1, 2024
- Research Methodology - Exploring Innovations in Research Methodology Mar 31, 2024
- Research Methodology - Crafting Effective Research Reports and Presentations Mar 30, 2024
- Research Methodology - Exploring the Basics of Qualitative Research Mar 28, 2024
No more next content
Sign in
Stay updated on your professional world
Sign in
By clicking Continue, you agree to LinkedIn’s User Agreement, Privacy Policy, and Cookie Policy.
New to LinkedIn? Join now
Insights from the community
- Economics What are the challenges of using a planned economy?
- Economics How can economic policies be evaluated for their impact on growth?
- Risk Management What are the most effective ways to use economic trends in security analysis?
- Economics What are some macroeconomic models for explaining business cycles?
- Economics What are the long-term economic impacts of policy decisions?
- Economics How can you give constructive feedback to your country's economy during a performance evaluation?
- Economics How do you use economic indicators to identify potential risks?
- Economics What do you do if you're asked about the biggest challenge facing the economy today?
- Economics How do you conduct economic impact studies for different industries?
- Economics What do you do if you're faced with complex economic problems that require critical thinking skills?
Others also viewed
- No Growth Economy Sally Taher 8y
- What's wrong with the World? - Part 2 - Sluggish Wealth Creation Chaitanya Indukuri 7y
- Where will economic growth come from? Mariano Browne 2y
- Economic Analysis - May 2017 Thomas P. Mulqueen III 6y
- Bankers, Keynesians, and Monetarists Neili Belhassen 7y
- PPP collaborative models to stimulate economic growth Kannan Rajarathnam 3y
- 2023 and the Global Factoring Industry Mark S. Mandula 1y
- SECTOR ROTATION Yogeshwar Vashishtha 3y
- The ingredients for economic growth and why growth is important. Prith David 6mo
Explore topics
- Sales
- Marketing
- Business Administration
- HR Management
- Content Management
- Engineering
- Soft Skills
- See All