When Interest Rates Allocate Capital

question 100

Multiple Choice

When interest rates allocate capital

• A) many worthwhile projects fail to get funded and society is worse off.
• B) investment projects of firms tend to get funded while valuable social investments funded by the government tend not to get funded.
• C) only investment projects are funded for which the expected benefits of the projects equal or exceed the opportunity cost of the projects.
• D) there is an under investment in capital and overspending on durable consumer goods.

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Definitions:

Problem Solving

Involves identifying, analyzing, and finding solutions to problems in order to overcome obstacles or improve situations.

Problem Deniers

Individuals or entities that refuse to acknowledge issues or challenges, often hindering the process of finding effective solutions.

Ignore Information

The act of deliberately choosing not to consider or acknowledge important data or facts.

Presence of a Problem

The situation in which an issue or challenge exists, requiring attention or resolution.