Other Things Equal, an Increase in the Equilibrium Interest Rate

question 173

Multiple Choice

Other things equal, an increase in the equilibrium interest rate will

• A) increase R&D spending.
• B) rise when the supply of loanable funds increases.
• C) decrease purchases of capital goods and reduce R&D spending.
• D) increase bank lending.

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Definitions:

Initial Investment

The initial amount of money spent to purchase an asset or start a project.

Annuities

Financial products that provide a series of payments over time, often used for retirement income.

Internal Rate

Often refers to the internal rate of return (IRR), which is a metric used to evaluate the profitability of potential investments.

Minimum Required

The least amount or level needed for a specific purpose, such as the minimum required investment or stock balance.