Which of the Following Situations Would Increase the Demand for Capital

question 50

Multiple Choice

Which of the following situations would increase the demand for capital?

• A)An improvement in technology increases the marginal product of capital.
• B)Capital wears out 50 percent faster than it used to.
• C)The Fed increases the interest rate.
• D)Sales are higher than anticipated, so the firm has enough cash on hand that it can afford to buy the new equipment outright.
• E)The Fed decreases the interest rate.

---

Definitions:

Regulatory Commissions

Government agencies responsible for enforcing specific regulations to protect public interest in various sectors.

Contain Costs

Strategies or measures implemented to prevent expenses from rising or to reduce them.

Natural Monopolies

Occur in industries where high infrastructure costs and other barriers to entry effectively prevent competition, with utility companies often cited as examples.

Legislation

Laws and legal provisions enacted by a government or legislative authority to regulate, authorize, forbid, or grant something.