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Assume That If the Interest Rate That Businesses Must Pay

question 100

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Assume that if the interest rate that businesses must pay to borrow funds were 20 percent, it would be unprofitable for businesses to invest in new machinery and equipment so that investment would be zero. But if the interest rate were 16 percent, businesses would find it profitable to invest $10 billion. If the interest rate were 12 percent, $20 billion would be invested. Assume that total investment continues to increase by $10 billion for each successive 4 percentage point decline in the interest rate.
-Refer to the above information. Using i and I to indicate the interest rate and investment (in billions of dollars) respectively, which of the following is the correct tabular presentation of the described relationship? Assume that if the interest rate that businesses must pay to borrow funds were 20 percent, it would be unprofitable for businesses to invest in new machinery and equipment so that investment would be zero. But if the interest rate were 16 percent, businesses would find it profitable to invest $10 billion. If the interest rate were 12 percent, $20 billion would be invested. Assume that total investment continues to increase by $10 billion for each successive 4 percentage point decline in the interest rate. -Refer to the above information. Using i and I to indicate the interest rate and investment (in billions of dollars)  respectively, which of the following is the correct tabular presentation of the described relationship?   A)  column (A)  B)  column (B)  C)  column (C)  D)  column (D)


Definitions:

Political\Legal Environment

The framework of laws, regulations, and political conditions that affect the operation of a business or organization.

Governmental Organizations

Institutions that are part of the government structure, operating under governmental rules and regulations to implement policies and provide public services.

Interest Groups

are organizations formed around a shared concern or advocacy for specific issues, aiming to influence public policy or opinion.

Immediate Environment

The immediate environment refers to the specific external factors and conditions directly surrounding and affecting a business, individual, or system at a given time.

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