As the interest rate (price for loanable funds) decreases, businesses will
A) find it less profitable to invest in capital goods, because the lower interest rate means that they will earn a lower return on their investments.
B) find it less profitable to invest in capital goods, because their costs of production will be higher.
C) increase their borrowings of loanable funds, because the cost of borrowing has declined relative to the benefits of borrowing.
D) decrease their borrowings of loanable funds, because there will now be cheaper ways to produce goods than to employ roundabout methods of production.
E) b and c
Correct Answer:
Verified
Q26: Which of the following statements is false?
A)The
Q27: If the interest rate increases, then
A)households will
Q28: The people most likely to save are
Q29: As the interest rate falls,
A)the quantity demanded
Q30: The supply curve of loanable funds is
Q32: If the price for loanable funds is
Q33: The term "roundabout methods of production" refers
Q34: If you have a high rate of
Q35: If the return on capital is 12
Q36: The demand curve for loanable funds is
A)upward
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