Answer the Question on the Basis of the Following Information

question 211

Multiple Choice

Answer the question on the basis of the following information. Assume that if the interest rate that businesses must pay to borrow funds were 20 percent, it would be unprofitable for businesses to invest in new machinery and equipment, so investment would be zero. But if the interest rate were 16 percent, businesses would find it profitable to invest $10 billion. If the interest rate were 12 percent, $20 billion would be invested. Assume that total investment continues to increase by $10 billion for each successive 4 percentage point decline in the interest rate. Refer to the information. Which of the following is an accurate verbal statement of the described relationship?

• A) There is no regular or dependable relationship between business investment and the interest rate.
• B) The amount of business investment is unaffected by changes in the interest rate.
• C) Investment spending by businesses varies inversely with the interest rate.
• D) Investment spending by businesses varies directly with the interest rate.

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Utilization of digital technology or devices to perform actions or provide services.

Lease Contracts

Agreements in which one party grants another the right to use property or equipment for a specified time in exchange for payment.

Enforceable

Pertains to a legal agreement or clause that can be compelled or upheld by a court of law.

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The act or process of representing words, numbers, or symbols on a surface, typically for the purpose of recording or communicating.