According to Classical Macroeconomic Theory,the Flexible Interest Rate

question 98

Multiple Choice

According to classical macroeconomic theory,the flexible interest rate

• A)is the incentive that encourages businesses to obtain credit.
• B)will tend to fall when the quantity of credit demanded exceeds the quantity of credit supplied.
• C)will tend to rise when the supply of credit exceeds the demand for credit.
• D)ensures that saving cannot exceed investment spending for extended periods of time.

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Definitions:

Average Rate of Return

A metric used to evaluate the profitability of an investment, calculated by dividing the average annual profit by the initial investment cost.

Capital Investment Proposals

Suggestions or plans for spending on long-term assets intended to improve a company's profitability in the future.

Cash Payback Period

The duration required for an investment to generate cash flows sufficient to recoup the initial outlay.

Operating Income

Earnings before interest and taxes (EBIT), a measure of a company's profitability from its core operations.