A Higher Interest Rate Will Lead a Firm to Purchase

question 20

Multiple Choice

A higher interest rate will lead a firm to purchase less capital because the higher interest rate

• A)lowers the marginal product of capital goods
• B)causes technological change to cease
• C)lowers the present value of capital goods
• D)causes economies of scale to be exhausted
• E)causes the capital market become monopolized

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Definitions:

Total Revenue

The complete sum of funds a company acquires from selling goods or offering services over a specified time period.

Operating Profit

The profit earned from a firm's core business operations, excluding deductions of interest and taxes.

Weekly Total Revenue

The total amount of money earned or received by a company, organization, or individual from all sources within a week.

Fixed Costs

Fixed costs are business expenses that remain constant regardless of the level of production or sales, such as rent, salaries, and insurance.