Which of the Following Explains Why Small Reductions in Interest

question 97

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.

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Definitions:

Ultraviolet Radiation

Electromagnetic radiation with a wavelength shorter than that of visible light, but longer than X-rays, which can have effects on the skin such as sunburns and vitamin D synthesis.

Gamma Radiation

Electromagnetic radiation of high frequency and thus high energy, often emitted by radioactive materials.

Air Pollution

The presence of substances in the air that are harmful to human health, the environment, or the climate.

Boreal Forest

A large biome of coniferous forest located in the northern regions of North America, Europe, and Asia, characterized by cold temperatures and short growing seasons.