Suppose That the Price of Loanable Funds Is Greater Than

question 39

Multiple Choice

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

• A)not borrow funds and eventually the capital stock will decrease and the return on capital will rise.
• B)borrow funds and, as a result, the capital stock will rise.
• C)not borrow funds and eventually the capital stock will increase and the return on capital will rise.
• D)borrow funds and, as a result, the price of credit will rise.

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Definitions:

Baddeley's Model

A model of working memory proposed by Alan Baddeley, which consists of three main components: the central executive, the phonological loop, and the visuospatial sketchpad.

Working Memory

A mental mechanism with finite capabilities, aimed at briefly storing information for subsequent processing tasks.

Short-Term Memory

The capacity for holding a small amount of information in an active, readily available state for a short period.

Everyday Memory

The capacity to remember and recall day-to-day events and interactions, crucial for normal functioning and social interaction.