The quantity of capital firms intend to hold at each interest rate is the:

Question

Quizplus · Accepted Answer

The quantity of capital firms intend to hold at each interest rate is the demand for capital. This is because firms determine the amount of capital they require to invest in new projects and expand their operations, which is influenced by the prevailing interest rate. The higher the interest rate, the lower the demand for capital as it becomes more expensive to borrow. Conversely, a lower interest rate will lead to higher demand for capital as borrowing becomes cheaper. Therefore, the correct answer is A.

The Quantity of Capital Firms Intend to Hold at Each