Which of the Following Would Be Most Likely to Lead

question 30

Multiple Choice

Which of the following would be most likely to lead to a higher level of interest rates in the economy?

• A) Households start saving a larger percentage of their income.
• B) Corporations step up their expansion plans and thus increase their demand for capital.
• C) The level of inflation begins to decline.
• D) The economy moves from a boom to a recession.
• E) The Federal Reserve decides to try to stimulate the economy.

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Definitions:

Earnings Per Share

A portion of a company's profit allocated to each outstanding share of common stock, serving as an indicator of the company's profitability.

Reverse Stock Splits

A corporate action in which a company reduces the number of its existing shares to increase the share price without changing the company's market capitalization.

Cash Dividends

Distributions of a portion of a company's earnings, decided by the board of directors, to a class of its shareholders in the form of cash.

New Capital

Financial resources that are raised by a business through issuing new stocks or bonds to invest in its operations and growth.