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As the interest rate (price for loanable funds) decreases, businesses will

kickergb40

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As the interest rate (price for loanable funds) decreases, businesses will

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find it less profitable to invest in capital goods, because the lower interest rate means that they will earn a lower return on their investments.

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find it less profitable to invest in capital goods, because their costs of production will be higher.

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increase their borrowings of loanable funds, because the cost of borrowing has declined relative to the benefits of borrowing.

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decrease their borrowings of loanable funds, because there will now be cheaper ways to produce goods than to employ roundabout methods of production.

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b and c

Textbook

Economics

Edition: 12^th

Author: Arnold

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Grem

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More solutions for this book are available here

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kickergb40 Author

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6 months ago

Correct

jayfo05

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Thank you, thank you, thank you!

DaiwalkerX

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Thanks for your help!!

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