The economic performance in the Great Recession of 2007-2009 clearly illustrated the relationship that if interest rates fall, then investment spending will increase. True / False.

Question

Social Studies

Conor

21 June, 01:14

The economic performance in the Great Recession of 2007-2009 clearly illustrated the relationship that if interest rates fall, then investment spending will increase. True / False.

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Answers (1)

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Darwin Hunt · Answer 1

FALSE

Explanation:

The relationship between low interest rates and investments is not always observed, especially in contexts of economic recession. In fact, low interest rates are the biggest stimulus for the economy. However, as in the 2008 crisis, household and firm indebtedness becomes an impediment to investment, even as interest rates fall.