When Interest Rates Allocate Capital

question 100

Multiple Choice

When interest rates allocate capital

• A) many worthwhile projects fail to get funded and society is worse off.
• B) investment projects of firms tend to get funded while valuable social investments funded by the government tend not to get funded.
• C) only investment projects are funded for which the expected benefits of the projects equal or exceed the opportunity cost of the projects.
• D) there is an under investment in capital and overspending on durable consumer goods.

---

Definitions:

Stock Options

Stock options grant the holder the right, but not the obligation, to buy or sell a company's stock at a predetermined price before a specified date.

Articles Of Incorporation

Legal documents filed with a governmental body to legally document the creation of a corporation, outlining its management structure, purpose, and other fundamental details.

Double Taxation

A situation where the same income is taxed twice, typically once at the corporate level and again when distributed to shareholders as dividends.

Company Management

The group of individuals responsible for making major decisions, overseeing operations, and managing the resources and strategy of a company.