Asked by Jessica Castro on Jul 15, 2024
Verified
Refer to Figure 11.1. If the market rate of interest is 8%, this firm's investment will total
A) $5,000.
B) $7,000.
C) $12,000.
D) $15,000.
Market Rate
The prevailing price determined by supply and demand in the open market for services or commodities.
Interest
The payments made for the use of money.
- Study the operation of decision-making within investment contexts, focusing specifically on interest rates and potential returns.
Verified Answer
M?
Muhittin ?ekerda?Jul 17, 2024
Final Answer :
B
Explanation :
At an 8% market rate of interest, firms will invest where the investment demand curve intersects the 8% interest rate line. This point corresponds to an investment level of $7,000.
Learning Objectives
- Study the operation of decision-making within investment contexts, focusing specifically on interest rates and potential returns.