Which of the Following Correctly Explains How Interest Rates Are

question 31

Multiple Choice

Which of the following correctly explains how interest rates are linked to investment?

• A) As interest rates increase, firms' cost of borrowing decreases.
• B) Higher rates of interest reduce investment by firms.
• C) Lower interest rates provide a bigger discount to future cash flows.
• D) As interest rates fall, investment and aggregate demand fall.

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Definitions:

Markup Percent

The markup on the original cost of goods intended to cover running costs and generate profit.

Selling Price

The amount of money a buyer pays to acquire a product or service from a seller.

Markup Percent

A percentage added to the cost price to determine the selling price.

Cost

Cost refers to the amount of money or resources expended to obtain a good or service, including production, materials, labor, and other expenses.