Asked by Aaliya Smith on Apr 24, 2024

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Investment and R&D decisions by firms are based on nominal interest rates, not real interest.

Nominal Interest Rates

The interest rate before taking inflation into account, representing the face value rate at which money can be borrowed.

R&D Decisions

Choices made by businesses or governments regarding the allocation of resources for research and development to innovate or improve products and services.

  • Understand the relationship between nominal and real interest rates, inflation, and investment decisions.
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CG
CINDY GREENE6 days ago
Final Answer :
False
Explanation :
Investment and R&D decisions by firms are primarily based on real interest rates because these rates exclude the effects of inflation and better reflect the true cost of borrowing and the real return on investments.