Other things equal, an increase in the equilibrium interest rate will

A) increase R&D spending.
B) rise when the supply of loanable funds increases.
C) decrease purchases of capital goods and reduce R&D spending.
D) increase bank lending.

Question

Reymundo Gutierrez · Accepted Answer

Final Answer : C, Explanation :  An increase in the equilibrium interest rate makes borrowing more expensive, which can lead to a decrease in investments in capital goods and research and development (R&D) spending, as firms may find it less attractive to finance these activities through borrowing.

Other things equal, an increase in the equilibrium interest rate will

A) increase R&D spending.
B) rise when the supply of loanable funds increases.
C) decrease purchases of capital goods and reduce R&D spending.
D) increase bank lending.

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Learning Objectives

Learning Objectives

Related questions

Other things equal, an increase in the equilibrium interest rate willA) increase R&D spending.B) rise when the supply of loanable funds increases.C) decrease purchases of capital goods and reduce R&D spending.D) increase bank lending.

Definitions

Learning Objectives

Learning Objectives

Related questions

Other things equal, an increase in the equilibrium interest rate will

A) increase R&D spending.
B) rise when the supply of loanable funds increases.
C) decrease purchases of capital goods and reduce R&D spending.
D) increase bank lending.