Multiple Choice
If the price for loanable funds is less than the return on capital, then firms will
A) borrow in the loanable funds market and invest in capital goods, and as this happens, the quantity of capital decreases and its return rises.
B) borrow in the loanable funds market and invest in capital goods, and as this happens, the quantity of capital increases and its return falls.
C) not borrow in the loanable funds market, and over time the capital stock will decrease and the return on capital will fall.
D) not borrow in the loanable funds market, and over time the capital stock will decrease and the return on capital will rise.
Correct Answer:
Verified
Correct Answer:
Verified
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