As the Prevailing Interest Rate Decreases, the Opportunity Cost of Money

question 117

Multiple Choice

As the prevailing interest rate decreases, the opportunity cost of money

• A) Increases for both lender and borrower.
• B) Increases for the borrower and decreases for the lender.
• C) Decreases for both lender and borrower.
• D) Decreases for the borrower and increases for the lender.

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Definitions:

Price Support Program

Governmental policies designed to maintain the price of a commodity at a certain level, to protect producers from market volatility.

Surplus

The amount by which the quantity supplied of a product exceeds the quantity demanded at a specific price.

Price Support Program

Government initiatives aimed at maintaining the market price of a commodity above its competitive equilibrium level.

Gasohol

A fuel mixture containing gasoline and ethanol, typically used in internal combustion engines.