The Price of a Loanable Fund Is Greater Than the Return

question 27

Multiple Choice

The price of a loanable fund is greater than the return on capital.It follows that firms will

• A) not borrow funds and eventually the capital stock will decrease and the return on capital will rise.
• B) borrow funds and, as a result, the capital stock will rise.
• C) not borrow funds and eventually the capital stock will increase and the return on capital will rise.
• D) borrow funds and, as a result, the price of credit will rise.
• E) none of the above

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Definitions:

AOQ

Average Outgoing Quality, a measure in quality control that represents the average quality level of products leaving the manufacturing process.

Type I Error

Statistically, the probability of rejecting a good lot.

Good Lot

A term used in quality control to describe a batch of products that meet specified quality standards.

AQL

Acceptable Quality Level, a statistical measurement used in quality control that defines the maximum number of defective items allowed in a sample lot.