Asked by Elisa Davis on Apr 28, 2024
Verified
Refer to Table 11.4. When the interest rate ________, the farmer will engage in no investment.
A) is greater than 30%
B) is less than 10%
C) is less than 30%
D) is greater than 10%
Expected Rate Of Return
The predicted amount of return a given investment is anticipated to earn over a specified period.
Total Investment
The aggregate amount of funds invested in an economy by businesses and individuals, including investments in capital assets and inventories.
- Understand the economic reasoning for choosing projects based on their anticipated rates of return compared to interest rates.
Verified Answer
AR
Albert RoteaApr 28, 2024
Final Answer :
A
Explanation :
When the interest rate is greater than 30%, the cost of borrowing exceeds the expected rate of return on all investment options, making none of them financially viable.
Learning Objectives
- Understand the economic reasoning for choosing projects based on their anticipated rates of return compared to interest rates.