Other Things Remaining the Same, as the Real Interest Rate

question 83

Multiple Choice

Other things remaining the same, as the real interest rate increases

• A) firms will borrow more funds.
• B) firms will borrow less funds.
• C) firms' demand for funds will not change.
• D) firms will purchase new capital with its own funds instead of taking a loan.
• E) the demand for loanable funds curve shifts leftward.

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Definitions:

High Fixed Costs

A financial situation where a company has a high proportion of fixed expenses, which do not vary with the level of production or sales.

High Marginal Costs

Situations where the cost to produce one additional unit is significantly high, often affecting pricing and profitability.

High Industry Growth

Refers to the rapid expansion of economic activity within a particular industry, typically measured by revenue, output, or sales increases.

Concentration of Buyers

Refers to a market situation where a small number of buyers control a large share of the market, potentially affecting pricing and competition.