Question : Which of the following is not true when the interest rate in the economy goes up?

Option 1: Saving increases

Option 2: Lending decreases

Option 3: Cost of production increases

Option 4: Return on capital increases


Team Careers360 11th Jan, 2024
Answer (1)
Team Careers360 20th Jan, 2024

Correct Answer: Return on capital increases


Solution : The correct answer is the Return on capital increases .

On a macroeconomic level, interest rates are the primary determinant of investment. The current theory holds that if interest rates rise everywhere, investment will decline, resulting in a decline in the national income. Higher rates encourage more saving, which leads to more investment and jobs, which boosts output and profits.

Know More About

Related Questions

TOEFL ® Registrations 2024
Apply
Accepted by more than 11,000 universities in over 150 countries worldwide
Manipal Online M.Com Admissions
Apply
Apply for Online M.Com from Manipal University
View All Application Forms

Download the Careers360 App on your Android phone

Regular exam updates, QnA, Predictors, College Applications & E-books now on your Mobile

150M+ Students
30,000+ Colleges
500+ Exams
1500+ E-books