If the Return on Capital Is 12 Percent and the Price

question 18

Multiple Choice

If the return on capital is 12 percent and the price for loanable funds is 14 percent, then

• A)currently businesses will not borrow loanable funds to invest in capital goods.
• B)eventually the return on capital will decrease to the point where businesses will find it profitable to borrow loanable funds.
• C)the return on capital will fall as the supply of capital decreases over time, and simultaneously, the price for loanable funds will increase as savers make even more savings available.
• D)a and b

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