When Interest Rates Fall in a Given Economy,it Causes Firms

question 55

Multiple Choice

When interest rates fall in a given economy,it causes firms to borrow __________ funds used for purchasing capital goods.The result will be a(n) ___________ in the level of capital employed in the economy.In terms of the production function (graphed with labor on the horizontal axis and Real GDP on the vertical axis) ,this then causes ____________________ which makes the LRAS curve shift ____________ resulting in ______________________.

• A) more; increase; the production function to shift upward; rightward; economic growth
• B) less; decrease; the production function to shift downward; leftward; a shrinking economy
• C) more; increase; a movement up along a given production function; rightward; economic growth
• D) more; increase; a movement down along a given production function; leftward; a shrinking economy

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Definitions:

Perpendicular

At right angles to.

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