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Assume That If the Interest Rate That Businesses Must Pay

question 182

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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 that 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 above information.Which of the following is the correct graphical presentation of the indicated relationship? 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 that 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 above information.Which of the following is the correct graphical presentation of the indicated relationship?   A)  line 4 B)  line 3 C)  line 2 D)  line 1


Definitions:

Short-term Production

The process of manufacturing goods or services over a relatively brief period, focusing on immediate output and efficiency.

Broad Blueprint

A comprehensive plan or strategy outlining the main components and goals of a project or initiative.

Aggregate Planning

The process of developing, analyzing, and maintaining a preliminary, approximate schedule of the overall operations of an organization.

Planning Horizon

The future time period for which plans or strategies are developed, taking into consideration forecasted demands and resource availability.

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