Asked by DARIN FILMS on May 12, 2024
Verified
The level of investment will tend to rise if the capacity utilization rate is ____________ and the interest rate is ______________.
A) high,high
B) low,low
C) high,low
D) low,high
Capacity Utilization Rate
A metric used to measure the rate at which potential output levels are being met or used.
Interest Rate
The percentage at which interest is charged or paid on amounts of money, reflecting the price of credit or returns on investment.
- Understand the role of interest rates, profit expectations, and economic cycles in investment decisions.
Verified Answer
HH
Hadeel HazzaaMay 13, 2024
Final Answer :
C
Explanation :
When the capacity utilization rate is high, businesses have higher profits and therefore have more funds available for investment. Additionally, with a low-interest rate, borrowing is cheaper, and businesses are more willing to take on debt to finance investments. This combination of high capacity utilization and low-interest rates creates a conducive environment for investment to increase.
Learning Objectives
- Understand the role of interest rates, profit expectations, and economic cycles in investment decisions.