Question

In \[I=f(r)\], which variable is the independent variable that influences investment?

Options

• \[I_n\] = Net Investment

• \[I\] = Investment

• \[r\] = Rate of interest

• \[Y\] = Aggregate Income

Answer 1

The rate of interest, \[r\], is the independent variable in the investment function. A change in \[r\] influences the planned amount of investment.