When the Interest Rate Falls

question 72

Multiple Choice

When the interest rate falls,

• A) the opportunity cost of holding money rises.
• B) people shift out of holding interest-yielding bonds into holding money.
• C) the quantity of money people will hold decreases.
• D) investment spending decreases.
• E) real GDP will decrease.

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Definitions:

Manufacturing Equipment

Manufacturing equipment refers to the machinery and tools used in the process of producing goods or handling materials.

Labour And Materials

The costs associated with the workforce (labour) and the raw materials used in the production of goods and services.

Tax Rate

The percentage at which an individual or corporation is taxed by the government, varying based on income or profit levels.

Present Value CCA Tax Shield (PVCCATS)

The present value of potential tax savings obtained from the capital cost allowance on depreciable assets, discounted back to the present.