The Return on Capital Is Greater Than the Price of Loanable

question 75

Multiple Choice

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

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