Suppose there is an increase in profitability.This suggests that
A)firms have increased their expectations of future profits.
B)the real interest rate has increased.
C)the rate of depreciation has increased.
D)all of the above

Question

Quizplus · Accepted Answer

An increase in profitability suggests that firms have made more profits than expected, which may lead them to increase their expectations for future profits. An increase in profitability is not necessarily related to changes in the real interest rate or the rate of depreciation. Therefore, options B and C are not correct.

Suppose There Is an Increase in Profitability