If the Price for Loanable Funds Is Less Than the Return

question 79

Multiple Choice

If the price for loanable funds is less than the return on capital, then firms will

• A)borrow in the loanable funds market and invest in capital goods, and as this happens, the quantity of capital decreases and its return rises.
• B)borrow in the loanable funds market and invest in capital goods, and as this happens, the quantity of capital increases and its return falls.
• C)not borrow in the loanable funds market, and over time the capital stock will decrease and the return on capital will fall.
• D)not borrow in the loanable funds market, and over time the capital stock will decrease and the return on capital will rise.

---

Definitions:

Intoxication

A state of diminished mental and physical ability resulting from the consumption of alcohol, drugs, or other psychoactive substances.

Perceptual Experiences

Subjective experiences derived from the process of interpreting sensory input from the environment.

Subjective

Shaped or affected by individual emotions, preferences, or viewpoints.

Signal-Detection Theory

A theory explaining how we discern between informative signals and noise, emphasizing the role of decision-making processes in the perception of stimuli.