The equilibrium interest rate
A)affects both the size of total output and its composition.
B)falls when the demand for loanable funds increases.
C)determines the composition of R&D spending but not its total amount.
D)increases when the expected rate of return on R&D spending falls.

Question

Quizplus · Accepted Answer

The equilibrium interest rate influences both the overall size of the economy's output and how that output is allocated among different sectors, including investments in various areas such as R&D, capital goods, and consumer goods.

The Equilibrium Interest Rate