Question content area

Part $1$

During a

recession$,$

Part $2$

A$.$

investment increases due to higher interest rates.

B$.$

investment responds strongly to lower interest rates since investment and interest rates are negatively related.

C$.$

investment may not respond positively to lower interest rates since low demand for goods leads to low capital utilization and low investment.

D$.$

investment may not respond positively to low interest rates because of expectations of strong sales in the future.