High Interest Investment

Why does investment spending depend on interest rates? Does it also depend on other factors?

1. Why does investment spending depend on interest rates? 2. Does it also depend on other factors? 3. Why do businesses and homeowners want to borrow in inflationary times when interest rates are high?

Public Comments

1. By investment you mean equity markets or capital? Either way, the expected real rate of return had best ensure to exceed the real rate of interest. Borrowing during inflationary times holds potential profits if that is the case. Other factors? Taxes, current debt, different determinants of demand...