Which of the Below Statements About the Rate of Interest

question 19

Multiple Choice

Which of the below statements about the rate of interest and cost of capital is FALSE?

• A) The maximum that a firm will invest depends on the rate of interest, which is the cost of loans; the firm will invest only as long as the marginal productivity of capital exceeds or equals the rate of interest.
• B) Firms will reject only projects whose gain is not less than their cost of financing.
• C) The firm's demand for borrowing is negatively related to the interest rate; if the rate is high, only limited borrowing and investment make sense.
• D) At a low rate of interest, more projects offer a profit, and the firm wants to borrow more; his negative relationship exists for each and all firms in the economy.

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Definitions:

SES (Socioeconomic Status)

A combined measure of an individual's or family's economic and social position relative to others, based on income, education, and occupation.

Male Advantage

The phenomenon where males, on average, perform better than females in certain cognitive or physical tasks, often discussed within the context of societal or biological influences.

Female Superiority

The belief or assertion that women are inherently superior to men, which can be discussed in various socio-cultural, biological, or psychological contexts.

Verbal Tasks

Activities or assignments that require the use or understanding of words and language, often employed in cognitive and psychological testing.