Where is the interest rate established, and how does it affect planned investment and related markets?

Show Answers

It is set in the goods market and impacts planned investment, thereby affecting the money market.It is established in the money market and affects planned investment, which in turn influences the goods market.It is set in the goods market and does not impact the money market.It is determined in the money market but has no effect on the goods market.

Explanation

The interest rate is determined within the money market, where it influences the level of planned investment. This change in investment then affects the goods market, linking the two markets through the interest rate.