A Rise in the Real Rate of Interest ________ the Opportunity

question 111

Multiple Choice

A rise in the real rate of interest ________ the opportunity cost of holding an inventory of a given size,and therefore ________ desired investment expenditure.

• A)increases; increases
• B)increases; decreases
• C)decreases; increases
• D)decreases; leaves unaffected
• E)decreases; decreases

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Definitions:

Required Rate Of Return

The minimum percentage return that investors expect to earn from their investment in a company or project.

Base Level

The initial or starting point used for comparison or measurement purposes in various contexts.

Total Costs

The sum of all expenses incurred by a business or individual in producing goods or services, including fixed, variable, and semi-variable costs.

Quantity Of Output

The total amount of goods or services produced by a company or sector.