If economic conditions become less favorable
A)expected cash flows on various projects will increase.
B)more proposed projects will have expected returns greater than the hurdle rate.
C)there would be additional acceptable business projects.
D)there would be a decreased demand by business for loanable funds.

Question

Quizplus · Accepted Answer

If economic conditions become less favorable, businesses may become hesitant to take on new projects or investments, leading to a decreased demand for loanable funds. This decrease in demand could result in lower interest rates or a decrease in the availability of funds for borrowing. Options A, B, and C all suggest an increase in potential projects or returns, which would not necessarily be the case in a less favorable economic climate.

If Economic Conditions Become Less Favorable