An Increase in the Interest Rate Results in

question 34

Multiple Choice

An increase in the interest rate results in

• A)a smaller opportunity cost of investment and so planned investment spending increases.
• B)a smaller opportunity cost of investment and so planned investment spending decreases.
• C)a greater opportunity cost of investment and so planned investment spending decreases.
• D)a greater opportunity cost of investment and so planned investment spending increases.

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Definitions:

Budget Line

A graphical representation of all possible combinations of two goods that can be purchased with a given budget at set prices.

Price of Food

The amount of money required to purchase food items in the market, which can vary based on factors like quality, demand, and supply.

Price of Clothing

Refers to the amount of money required to purchase garments and accessories.

Valuation

The process of determining the present value of an asset or company.