The Concept of Present Value Helps Explain Why

question 168

Multiple Choice

The concept of present value helps explain why

• A)investment decreases when the interest rate increases,and it also helps explain why the quantity of loanable funds demanded decreases when the interest rate increases.
• B)investment decreases when the interest rate increases,but it is of no help in explaining why the quantity of loanable funds demanded decreases when the interest rate increases.
• C)the quantity of loanable funds demanded decreases when the interest rate increases,but it is of no help in explaining why investment decreases when the interest rate increases.
• D)None of the above are correct;the concept of present value is of no help in explaining why either investment or the quantity of loanable funds demanded decreases when the interest rate increases.

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Definitions:

Economic Development

Activities aimed at improving the economic well-being and quality of life for a community, by creating and retaining jobs and supporting or growing incomes.

Operational

Pertains to the normal, day-to-day activities required for an organization or project to function effectively and efficiently.

Consolidation

Consolidation refers to the process of combining assets, liabilities, and other financial items of two or more entities into one.

Autonomy

The capacity to make decisions and act independently, free from external control or influence.