Higher Interest Rates

question 73

Multiple Choice

Higher interest rates

• A) lower the opportunity cost of using funds for investment, and they increase investment.
• B) increase the opportunity cost of using funds for investment, and they increase investment.
• C) increase the opportunity cost of using funds for investment, and they reduce investment.
• D) lower the opportunity cost of using funds for investment, and they reduce investment.

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Definitions:

Lump Sum

A significant amount of money that is paid in one single payment instead of multiple payments.

Compounded Monthly

This refers to the process of calculating interest on the principal sum of a loan or deposit in which interest is added to the principal each month.

Quarterly

Relating to a three-month period or happening quarterly.

Interest Earned

The income received from lending money or depositing funds into interest-bearing accounts.