If a Firm Wants to Borrow $10 Million and the Real

question 130

Multiple Choice

If a firm wants to borrow $10 million and the real interest rate increases from 5 percent to 6 percent, then the cost of the investment has increased by

• A) $1 million per year.
• B) $100,000 per year.
• C) $6 million per year.
• D) $600,000 per year.
• E) nothing because the real interest rate is the return the firm will earn on its investment.

---

Definitions:

Ngo Dinh Diem

A South Vietnamese politician who served as the President of South Vietnam from 1955 until his assassination in 1963.

Virtual Dictatorship

A form of government in which power is effectively concentrated in the hands of an individual or a small group, without the formal title of dictator, often lacking checks and balances or democratic processes.

Strictly Constitutional

Adhering rigidly to the Constitution, often implying a conservative or literal interpretation of this foundational document.

Self-Immolation

The act of setting oneself on fire as a form of protest or sacrifice, often associated with political or religious motives.