Which of the Following Would Be True If the Market

question 20

Multiple Choice

Which of the following would be true if the market interest rate increases?

• A)The cost of borrowing would increase, and this would decrease saving.
• B)The opportunity cost of consuming a good in the future would increase, and this would increase saving.
• C)The opportunity cost of consuming a good in the future would increase, and saving would decrease.
• D)The reward for saving would decrease, and present consumption would increase.
• E)The reward for saving would increase, and this would increase saving.

---

Definitions:

Retained Earnings

The portion of net profits left in the company after dividends have been paid to shareholders.

Voting Shares

Shares that give the shareholder the right to vote on matters of corporate policy and the election of board members.

Purchase Method

A method of accounting for an acquisition where the purchaser's financial statements include the assets and liabilities of the acquired company at their fair values.

Acquisition

The process of gaining control of another company or business entity through purchase or merger, often to expand operations or enter new markets.