Question 2 (Unit 1). Theoretically, when the cost of borrowing money (measured by the interest rate) decreases, business

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Question 2 Unit 1 Theoretically When The Cost Of Borrowing Money Measured By The Interest Rate Decreases Business 1 (40.14 KiB) Viewed 57 times

Question 2 (Unit 1). Theoretically, when the cost of borrowing money (measured by the interest rate) decreases, business firms tend to increase their investment spending on equipment, machinery, structure etc. Below are the data for both investment and the interest rate for a particular country, Year Interest rate (%) 2015 Investment (billions of $) 1.3 1.7 9.3 2016 8,3 2017 2.3 7.6 2018 2.0 7.8 2.4 7.5 2019 2020 2021 2.6 7.2 2.5 7.3 a. Using time plots, display the behavior of investment and interest rate over the 2015-2021 period. Comment on your results. b. Which variable is the dependent variable, and which is the independent variable? Explain. c. Using the scatter diagram, investigate the relationship between the two variables. Does your result confirm the theory stated above? Explain clearly.