Answer:
Increases the interest rate:
- An investment tax credit
- An increase in large investments
Decreases the interest rate:
- A decrease in investor optimism
- An increase in savings
Explanation:
Changes in investments affect the demand to borrow. In particular, an increase of large investments shifts the demand to borrow curve to the right. As a result, the equilibrium interest rate will be higher.
An investment tax credit will also shift the demand curve to the right and increase the equilibrium interest rate.
A decrease in investor optimism will decrease the demand to borrow. This will shift the demand curve to the left and decrease the equilibrium interest rate.
An increase in savings affects the supply of savings by shifting the supply of savings to the right. As a result, the equilibrium interest rate will decrease.
