[Solved] Which from the following is not true when the interest rate in the economy goes up?

McqMate

Q.	Which from the following is not true when the interest rate in the economy goes up?
A.	Saving increases
B.	Lending decreases
C.	Cost of production increases
D.	Return on capital increases
Answer» D. Return on capital increases
Explanation: The interest rate is the cost of demanding or borrowing loanable funds. Alternatively, the interest rate is the rate of return from supplying or lending loanable funds. The demand for loanable funds takes account of the rate of return on capital. The rate of return on capital is the additional revenue that a firm can earn from its employment of new capital. This additional revenue is usually measured as a percentage rate per unit of time, which is why it is called the rate of return on capital.

2.2k

0

Do you find this helpful?

1

View all MCQs in

Discussion

No comments yet

Related MCQs

A loan bearing either no rate of interest or an interest rate which is below the true cost of capital lent is known as:
Which among the following statements is not true when there is an increase in interest rate in an economy?
The interest due by applying the rate to the sum of the capital invested plus the interest previously earned and reinvested is referred to as
Bank Rate refers to the interest rate at which -
The part of the economy in which economy activity is carried on by private enterprise is termed:
Bank rate is the rate of interest -
Bank rate is the rate of interest:
The situation in which aggregate demand in the economy is growing at a rate reliable to lead to inflation is called:
The relationship between the rate of interest and level of consumption was first visualized by -
Rate of interest is determined by -