An Increase in the Interest Rate Causes a Decrease in Investment

question 118

True/False

An increase in the interest rate causes a decrease in investment by shifting the loanable funds demand curve to the left.

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Definitions:

Marginal Product

The growth in output due to an extra unit of input.

Perfectly Competitive

A market structure where numerous small firms sell identical products, there’s free entry and exit, and no single firm can influence the market price.

Marginal Cost Curve

A graphical representation showing how the cost of producing one additional unit of a good or service changes as production volume changes.

Variable Input

Any resource for which the quantity used in production can vary as the level of output changes.