Explain the relationship between the market interest rate and the amount of investment a firm will undertake
What will be an ideal response?
There is an inverse relationship between the market interest rate and the amount of investment a firm will undertake. As the interest rate falls, investment projects that were not previously profitable may become profitable and the firm's expenditure on investment projects will rise.
You might also like to view...
Germany and __________ are two major banking-oriented systems
A) the United Kingdom B) Japan C) France D) the United States
Refer to Table 2.4. The inflation rate for 2012 is
A) -8.22%. B) 8.95%. C) 9.13%. D) 10.89%.
Globalization has most likely occurred for which of the following reasons?
a. International agreements and treaties between countries have encouraged greater trade. b. Expanding cultural connections between people around the world. c. Expanding economics connections between people around the world. d. Increased military spending.
Which of the following is true of a production possibility frontier?
a. Producing on the production possibilities frontier implies productive efficiency, and society producing where it wants to be producing implies allocative efficiency. b. Producing on the production possibilities frontier implies allocative efficiency, and society producing where it wants to be producing implies productive efficiency. c. Producing on the production possibilities frontier implies both productive efficiency and allocative efficiency. d. Producing where the society wants to be producing implies both productive efficiency and allocative efficiency.