Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
Aggregate demand
B
Inflation rates
C
Tax revenue
D
Unemployment rates
Understanding the Answer
Let's break down why this is correct
Answer
Interest rates can influence investment spending because they determine the cost of borrowing money. When interest rates are low, businesses and individuals are more likely to borrow and invest in new projects or purchases, which helps the economy grow. Similarly, government spending impacts another important economic factor: overall demand in the economy. When the government spends money on projects like building roads or schools, it creates jobs and increases the demand for goods and services. For example, if the government invests in a new highway, construction workers get paid, and they will spend that money on things like food or clothing, boosting the economy further.
Detailed Explanation
When the government spends money, it helps increase overall demand for goods and services. Other options are incorrect because Some might think government spending directly causes prices to rise; It's easy to confuse spending with revenue.
Key Concepts
Interest Rates
Investment Spending
Aggregate Demand
Topic
Interest Rates and Economic Impact
Difficulty
medium level question
Cognitive Level
understand
Ready to Master More Topics?
Join thousands of students using Seekh's interactive learning platform to excel in their studies with personalized practice and detailed explanations.