Which of the Following Explains Why Small Reductions in Interest

question 1

Multiple Choice

Which of the following explains why small reductions in interest rates may not lead to an increase in investment spending?

• A)Excess capacity gives businesses little incentive to expand production capacity.
• B)Investment demand is elastic with respect to the interest rate.
• C)Improved expectations shift the investment demand curve to the right.
• D)Banks are eager to make loans at the lower interest rate.

---

Definitions:

Convention Against Torture

United Nations international human rights agreement signed on December 10, 1984, as a commitment against the use of torture in their country for any reason; signatory nations also agree not to use any evidence obtained under torture and not to deport or return people to countries where they are at risk of being tortured.

Active Recruitment

A strategic approach to hiring that involves actively seeking out and engaging with potential candidates for employment, rather than passively waiting for applicants.

Great Depression

A severe worldwide economic downturn that lasted from the late 1920s through the 1930s, leading to mass unemployment and poverty.

World War II

A global conflict that lasted from 1939 to 1945, involving most of the world's nations, including all of the great powers, eventually forming two opposing military alliances: the Allies and the Axis.