Which from the following is not true when the interest rate in the economy goes up? (1) Saving increases (2) Lending decreases (3) Cost of production increases (4) Return on capital increases

Which from the following is not true when the interest rate in the economy goes up? (1) Saving increases (2) Lending decreases (3) Cost of production increases (4) Return on capital increases
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(4) Return on capital increases Explanation: The interest rate is the cost of demanding or borrowing loanable funds. Alternatively, the interest rate is the rate of return from supplying or lending loanable funds. The demand for loanable funds takes account of the rate of return on capital. The rate of return on capital is the additional revenue that a firm can earn from its employment of new capital. This additional revenue is usually measured as a percentage rate per unit of time, which is why it is called the rate of return on capital.
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Which from the following is not true when the interest rate in the economy goes up ? (1) Saving increases (2) Lending decreases (3) Cost of production increases (4) Return on capital increases

Description : Which from the following is not true when the interest rate in the economy goes up ? (1) Saving increases (2) Lending decreases (3) Cost of production increases (4) Return on capital increases

Last Answer : Return on capital increases

Which among the following statements is not true when there is an increase in interest rate in an economy? (1) increase in saving (2) decrease in loan (3) increase in production cost (4) increase in capital return

Description : Which among the following statements is not true when there is an increase in interest rate in an economy? (1) increase in saving (2) decrease in loan (3) increase in production cost (4) increase in capital return

Last Answer : (4) increase in capital return Explanation: Interest rate increase the cost of borrowing, which results in lesser investment activity and the purchase of consumer durables. In a low interest-rate ... . All of these factors raise output and employment as well as investment and consumer spending.

Which among the following statements is not true when there is an increase in interest rate in an economy ? (1) increase in saving (2) decrease in loan (3) increase in production cost (4) increase in capital return

Description : Which among the following statements is not true when there is an increase in interest rate in an economy ? (1) increase in saving (2) decrease in loan (3) increase in production cost (4) increase in capital return

Last Answer : increase in capital return

Which among (he following is not the outcome of decrease in prime lending rate? (1) to raise the bank loan (2) decline in saving rate (3) decline in productivity (4) increased demand of consumer products

Description : Which among (he following is not the outcome of decrease in prime lending rate? (1) to raise the bank loan (2) decline in saving rate (3) decline in productivity (4) increased demand of consumer products

Last Answer : (3) decline in productivity Explanation: Prime rate or prime lending rate is a term applied in many countries to a reference interest rate used by banks. The term originally indicated the rate ... falls to meet the new lower demand. Less output requires fewer worker, driving unemployment higher.

Which among the following is not the outcome of decrease in prime lending rate ? (1) to raise the bank loan (2) decline in saving rate (3) decline in productivity (4) increased demand of consumer products

Description : Which among the following is not the outcome of decrease in prime lending rate ? (1) to raise the bank loan (2) decline in saving rate (3) decline in productivity (4) increased demand of consumer products

Last Answer :  decline in productivity

As the number of investments made by a firm increases, its internal rate of return - (1) declines due to diminishing marginal productivity. (2) declines because the market rate of interest will fall, ceteris paribus. (3) increases to compensate the firm for the current consumption foregone. (4) increases because the level of savings will fall.

Description : As the number of investments made by a firm increases, its internal rate of return - (1) declines due to diminishing marginal productivity. (2) declines because the market rate of interest will ... the firm for the current consumption foregone. (4) increases because the level of savings will fall.

Last Answer : (3) increases to compensate the firm for the current consumption foregone. Explanation: Internal rates of return are commonly used to evaluate the desirability of investments or projects. The higher a ... of return is greater than an established minimum acceptable rate of return or cost of capital.

As the number of investments made by a firm increases, its internal rate of return (1) declines due to diminishing marginal productivity. (2) declines because the market rate of interest will fall, ceteris paribus. (3) increases to compensate the firm for the current consumption foregone. (4) increases because the level of savings will fall.

Description : As the number of investments made by a firm increases, its internal rate of return (1) declines due to diminishing marginal productivity. (2) declines because the market rate of interest will fall ... firm for the current consumption foregone. (4) increases because the level of savings will fall.

Last Answer :  increases to compensate the firm for the current consumption foregone.

Rate of interest is determined by - (1) The rate of return on the capital invested (2) Central Government (3) Liquidity preference (4) Commercial Banks

Description : Rate of interest is determined by - (1) The rate of return on the capital invested (2) Central Government (3) Liquidity preference (4) Commercial Banks

Last Answer : (3) Liquidity preference Explanation: According to the classical view, rate of interest is determined by the interaction of supply of and demand for capital. Thus this theory is popularly called ... higher shall be the rate of interest. The liquidity preference constitutes the demand for money.

Rate of interest is determined by - (1) The rate of return on the capital invested (2) Central Government (3) Liquidity preference (4) Commercial Banks

Description : Rate of interest is determined by - (1) The rate of return on the capital invested (2) Central Government (3) Liquidity preference (4) Commercial Banks

Last Answer : (4) Commercial Banks Explanation: Bank Rate is determined by the Reserve Bank of India. The rate of interest is determined by the commercial banks in India. As per RBI notification, banks are free to determine rates of interest subject to BPLR and spread guidelines.

'Marginal efficiency of capital' is - (1) expected rate of return on new investment (2) expected rate of return of existing investment (3) difference between rate of profit and rate of interest (4) value of output per unit of capital invested

Description : 'Marginal efficiency of capital' is - (1) expected rate of return on new investment (2) expected rate of return of existing investment (3) difference between rate of profit and rate of interest (4) value of output per unit of capital invested

Last Answer : (1) expected rate of return on new investment Explanation: The volume of investment depend upon the following two factors: (1) rate of interest: and (2) marginal efficiency of capital. Before ... partly on expectations of future yields and partly on the actual price of the capital good concerned.

Rate of interest is determined by (1) The rate of return on the capital invested (2) Central Government (3) Liquidity preference (4) Commercial Banks

Description : Rate of interest is determined by (1) The rate of return on the capital invested (2) Central Government (3) Liquidity preference (4) Commercial Banks

Last Answer : Liquidity preference

‘Marginal efficiency of capital’ is (1) expected rate of return on new investment (2) expected rate of return of existing investment (3) difference between rate of profit and rate of interest (4) value of output per unit of capital invested

Description : ‘Marginal efficiency of capital’ is (1) expected rate of return on new investment (2) expected rate of return of existing investment (3) difference between rate of profit and rate of interest (4) value of output per unit of capital invested

Last Answer :  expected rate of return on new investment

If an industry is characterized by economies of scale then - (1) barriers to entry are not very large (2) long run unit costs of production decreases as the quantity the firm produces increases (3) capital requirement are small due to the efficiency of the large scale operation (4) the costs of entry into the market are likely to be substantial

Description : If an industry is characterized by economies of scale then - (1) barriers to entry are not very large (2) long run unit costs of production decreases as the quantity the firm produces increases (3) ... of the large scale operation (4) the costs of entry into the market are likely to be substantial

Last Answer : (2) long run unit costs of production decreases as the quantity the firm produces increases Explanation: In microeconomics, economies of scale are the cost advantages that an enterprise obtains due to expansion ... in unit cost as the size of a facility and the usage levels of other inputs increase.

If an industry is characterised by economies of scale then (1) barriers to entry are not very large (2) long run unit costs of production decreases as the quantity the firm produces increases (3) capital requirement are small due to the efficiency of the large scale operation (4) the costs of entry into the market are likely to be substantial

Description : If an industry is characterised by economies of scale then (1) barriers to entry are not very large (2) long run unit costs of production decreases as the quantity the firm produces increases (3) ... of the large scale operation (4) the costs of entry into the market are likely to be substantial 

Last Answer : long run unit costs of production decreases as the quantity the firm produces increases

A high Statutory Liquidity Ratio (SLR) (1) restricts lending (2) increases supply of cash (3) provides funds to the state (4) increases the strength of the banks

Description : A high Statutory Liquidity Ratio (SLR) (1) restricts lending (2) increases supply of cash (3) provides funds to the state (4) increases the strength of the banks

Last Answer : (1) restricts lending Explanation: Statutory Liquidity Ratio refers to the amount that the commercial banks require to maintain in the form gold or government approved securities before providing credit to ... , suck liquidity in the market, to tighten the measure to safeguard the customers' money.

A high Statutory Liquidity Ratio (SLR) (1) restricts lending (2) increases supply of cash (3) provides funds to the state (4) increases the strength of the banks

Description : A high Statutory Liquidity Ratio (SLR) (1) restricts lending (2) increases supply of cash (3) provides funds to the state (4) increases the strength of the banks 

Last Answer : restricts lending 

According to the classical system, saving is a function of - (1) Income (2) The interest rate (3) The real wage (4) The Price level

Description : According to the classical system, saving is a function of - (1) Income (2) The interest rate (3) The real wage (4) The Price level

Last Answer : (1) Income Explanation: Saving function is a mathematical relation between saving and income by the household sector. This function captures the saving-income relation, the flip side of the consumption-income relation that forms one of the key building blocks for Keynesian economics.

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Last Answer : (b) level of income.

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Description : According to the classical system, saving is a function of (1) Income (2) The interest rate (3) The real wage (4) The Price level

Last Answer : Income

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Description : Cost of production of the producer is given by: (1) sum of wages paid to labourers. (2) sum of wages and interest paid on capital. (3) sum of wages, interest, rent and supernormal profit. (4) sum of wages, interest, rent and normal profit.

Last Answer : (4) sum of wages, interest, rent and normal profit. Explanation: The following elements are included in the cost of production: (1) Purchase of raw machinery, (2) Installation of plant and machinery ... also added, (k) The normal profit of the entrepreneur is also included In the cost of production.

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Description : Cost of production of the producer is given by: (1) sum of wages paid to labourers. (2) sum of wages and interest paid on capital. (3) sum of wages, interest, rent and supernormal profit. (4) sum of wages, interest, rent and normal profit.

Last Answer : sum of wages, interest, rent and normal profit.

When C : N ratio goes on increasing the availability of nutrients to crops will- a. Increases b. Decreases c. Does not change d. None of these

Description : When C : N ratio goes on increasing the availability of nutrients to crops will- a. Increases b. Decreases c. Does not change d. None of these

Last Answer : b. Decreases

Lower interest rates are likely to (a) Decrease consumption. (b) Increase cost of borrowing. © Encourage saving. (d) Increase borrowing and spending.

Description : Lower interest rates are likely to (a) Decrease consumption. (b) Increase cost of borrowing. © Encourage saving. (d) Increase borrowing and spending.

Last Answer : (d) Increase borrowing and spending.

How the interest-level of a country is affected by FDI? (1) increases (2) decreases (3) remains unaffected (4) there is increase or decrease

Description : How the interest-level of a country is affected by FDI? (1) increases (2) decreases (3) remains unaffected (4) there is increase or decrease

Last Answer : (2) decreases Explanation: A higher international interest rate will decrease FDI since it means a higher cost of fund in international market, and vice versa. Interest rate is a measure of the cost of capital ... to a decrease in FDI. Interest rate and FDI can both be the cause and effect of other.

How the interest-level of a country is affected by FDI ? (1) increases (2) decreases (3) remains unaffected (4) there is increase or decrease

Description : How the interest-level of a country is affected by FDI ? (1) increases (2) decreases (3) remains unaffected (4) there is increase or decrease

Last Answer : decreases

The internal rate of return - (1) must be less than the interest rate if the firm is to in-vest. (2) makes the present value of profits equal to the present value of costs. (3) falls as the annual yield of an investment rises. (4) is equal to the market interest rate for all the firm's in-vestment.

Description : The internal rate of return - (1) must be less than the interest rate if the firm is to in-vest. (2) makes the present value of profits equal to the present value of costs. (3) falls as the annual yield of an investment rises. (4) is equal to the market interest rate for all the firm's in-vestment.

Last Answer : (3) falls as the annual yield of an investment rises. Explanation: The internal rate of return on an investment or project is the "annualized effective compounded re-turn rate" or discount rate ... the investment equals the net present value of the benefits (positive cash flows) of the investment.

The internal rate of return (1) must be less than the interest rate if the firm is to invest. (2) makes the present value of profits equal to the present value of costs. (3) falls as the annual yield of an investment rises. (4) is equal to the market interest rate for all the firm’s investment.

Description : The internal rate of return (1) must be less than the interest rate if the firm is to invest. (2) makes the present value of profits equal to the present value of costs. (3) falls as the annual yield of an investment rises. (4) is equal to the market interest rate for all the firm’s investment. 

Last Answer : falls as the annual yield of an investment rises.

Which one of the following statements is correct concerning the weighted average cost of capital (WACC)? a) The WACC may decrease as a firm's debt-equity ratio increases. b) In the computation of WACC, weight assigned to the preferred stock is based on the coupon rate multiplied by the par value of the stock. c) A firm's WACC will decrease as the corporate tax rate decreases. d) The weight of the common stock used in the computation of the WACC is based on the number of shares outstanding multiplied by the book value per share.

Description : Which one of the following statements is correct concerning the weighted average cost of capital (WACC)? a) The WACC may decrease as a firm's debt-equity ratio increases. b) In the computation of ... of the WACC is based on the number of shares outstanding multiplied by the book value per share.

Last Answer : a) The WACC may decrease as a firm's debt-equity ratio increases.

Capital formation in an economy depends on - (1) Total Income (2) Tot al demand (3) Total savings (4) Total production

Description : Capital formation in an economy depends on - (1) Total Income (2) Tot al demand (3) Total savings (4) Total production

Last Answer : (3) Total savings Explanation: Capital formation refers to capital accumulation, referring to the total "stock of capital" that has been formed, or to the growth of this total capital stock. ... a measure of the amount by which the total physical capital stock increased during an accounting period.

Capacity utilization - (1) is usually near 100 percent. (2) represents the percent of the labour force that is employed. (3) is a measure of the proportional of the existing capital stock used for current production. (4) rises as the economy moves into a recession, since firms must replace unemployed workers with some other resources to maintain production.

Description : Capacity utilization - (1) is usually near 100 percent. (2) represents the percent of the labour force that is employed. (3) is a measure of the proportional of the existing capital ... into a recession, since firms must replace unemployed workers with some other resources to maintain production.

Last Answer : (3) is a measure of the proportional of the existing capital stock used for current production. Explanation: Capacity utilisation refers to the extent or level to which the productive capacity of a ... as a percentage, it is computed by dividing the total capacity with the portion being utilized.

Capital formation in an economy depends on (1) Total Income (2) Total demand (3) Total savings (4) Total production

Description : Capital formation in an economy depends on (1) Total Income (2) Total demand (3) Total savings (4) Total production

Last Answer : Total savings

Capacity utilisation (1) is usually near 100 percent. (2) represents the percent of the labour force that is employed. (3) is a measure of the proportional of the existing capital stock used for current production. (4) rises as the economy moves into a recession, since firms must replace unemployed workers with some other resources to maintain production.

Description : Capacity utilisation (1) is usually near 100 percent. (2) represents the percent of the labour force that is employed. (3) is a measure of the proportional of the existing capital ... into a recession, since firms must replace unemployed workers with some other resources to maintain production.

Last Answer : is a measure of the proportional of the existing capital stock used for current production.

Which of the following is true to Euler’s theorem of factor pricing ? (a) Constant return to scale (b) Static and risk free economy (c) Perfect competition (d) All of the above

Description : Which of the following is true to Euler’s theorem of factor pricing ? (a) Constant return to scale (b) Static and risk free economy (c) Perfect competition (d) All of the above

Last Answer : (d) All of the above

Enterpreneurial ability is a special kind of labour that - (1) is hired out to firms at high wages (2) organizes the process of production (3) produces new capital goods to earn interest (4) manages to avoid losses by continual innovation

Description : Enterpreneurial ability is a special kind of labour that - (1) is hired out to firms at high wages (2) organizes the process of production (3) produces new capital goods to earn interest (4) manages to avoid losses by continual innovation

Last Answer : (2) organizes the process of production Explanation: In economics, factors of production are the inputs to the production process. Factors of production' may also refer specifically to the 'primary factors', ... the other factors of production, land, labor, and capital, in order to make a profit.

Enterpreneurial ability is a special kind of labour that (1) is hired out to firms at high wages (2) organizes the process of production (3) produces new capital goods to earn interest (4) manages to avoid losses by continual innovation

Description : Enterpreneurial ability is a special kind of labour that (1) is hired out to firms at high wages (2) organizes the process of production (3) produces new capital goods to earn interest (4) manages to avoid losses by continual innovation

Last Answer : organizes the process of production

With increase in the discounted cash flow rate of return, the ratio of the total present value to the initial investment of a given project (A) Decreases (B) Increases (C) Increases linearly (D) Remain constant

Description : With increase in the discounted cash flow rate of return, the ratio of the total present value to the initial investment of a given project (A) Decreases (B) Increases (C) Increases linearly (D) Remain constant

Last Answer : (A) Decreases

An economy is in equilibrium when - (1) planned consumption exceeds planned saving (2) planned consumption exceeds planned investment (3) intended saving equals intended investment (4) intended investment exceeds intended savings

Description : An economy is in equilibrium when - (1) planned consumption exceeds planned saving (2) planned consumption exceeds planned investment (3) intended saving equals intended investment (4) intended investment exceeds intended savings

Last Answer : (3) intended saving equals intended investment Explanation: In economics, economic equilibrium is a state of the world where economic forces are balanced and in the absence of external influences ... and intended investment. An economy is in equilibrium when total savings equal total investment.

An economy is in equili-brium when (1) planned consumption exceeds planned saving (2) planned consumption exceeds planned investment (3) intended investment equals intended investment (4) intended investment exceeds intended savings

Description : An economy is in equili-brium when (1) planned consumption exceeds planned saving (2) planned consumption exceeds planned investment (3) intended investment equals intended investment (4) intended investment exceeds intended savings

Last Answer : intended investment equals intended investment

Cheap money means - (1) Low rates of interest (2) Low level of saving (3) Low level of income (4) Low level of standard of livtrig

Description : Cheap money means - (1) Low rates of interest (2) Low level of saving (3) Low level of income (4) Low level of standard of livtrig

Last Answer : (1) Low rates of interest Explanation: Cheap money is a loan or credit with a low interest rate, or the setting of low interest rates by a central bank like the Federal Reserve. ... funds, CDs and bonds. Cheap money can have detrimental economic consequences as borrowers take on excessive leverage.

The interest rate on a bond ______ by________ for each______ in the bond rating category. a. Increases; 0.5%; Decrease b. Decreases; 1.4%; Decrease c. Increases; 0.5%; Increases d. Decreases; 1.4%; Increase e. Increases; 7.5% ; Decrease

Description : The interest rate on a bond ______ by________ for each______ in the bond rating category. a. Increases; 0.5%; Decrease b. Decreases; 1.4%; Decrease c. Increases; 0.5%; Increases d. Decreases; 1.4%; Increase e. Increases; 7.5% ; Decrease

Last Answer : a. Increases; 0.5%; Decrease

. If the actual rate of unemployment exceeds to natural rate of unemployment then: A. Actual output of the economy will fall below its potential B. Production will increase more than potential C. Consumption of goods decreases D. Both (a) and (c) above.

Description : . If the actual rate of unemployment exceeds to natural rate of unemployment then: A. Actual output of the economy will fall below its potential B. Production will increase more than potential C. Consumption of goods decreases D. Both (a) and (c) above.

Last Answer : D. Both

If the actual rate of unemployment exceeds to natural rate of unemployment then (a) Actual output of the economy will fall below its potential ; (b) Production will increase more than potential ; (c) Consumption of goods decreases; (d) Both (a) and (c) above.

Description : If the actual rate of unemployment exceeds to natural rate of unemployment then (a) Actual output of the economy will fall below its potential ; (b) Production will increase more than potential ; (c) Consumption of goods decreases; (d) Both (a) and (c) above.

Last Answer : (d) Both (a) and (c) above.

)A very high rise in National Income at current market prices and a low rise at constant prices reveals - (1) the high rate of growth in the economy at the current period (2) the increased production in the current period (3) the improper growth of the economy (4) the high rate of inflation prevailing in the economy

Description : )A very high rise in National Income at current market prices and a low rise at constant prices reveals - (1) the high rate of growth in the economy at the current period (2) the increased ... period (3) the improper growth of the economy (4) the high rate of inflation prevailing in the economy

Last Answer : (3) the improper growth of the economy Explanation: When national output is multiplied by present ruling price, we obtain national income at current prices. On the other hand if the national output is ... not indicate increase in product or output, but is rather due to the rise in price level.

A very high rise in National Income at current market prices and a low rise at constant prices reveals (1) the high rate of growth in the economy at the current period (2) the increased production in the current period (3) the improper growth of the economy (4) the high rate of inflation prevailing in the economy

Description : A very high rise in National Income at current market prices and a low rise at constant prices reveals (1) the high rate of growth in the economy at the current period (2) the increased production ... (3) the improper growth of the economy (4) the high rate of inflation prevailing in the economy 

Last Answer :  the high rate of inflation prevailing in the economy

What is the lending of money at interest rates higher than the legal limits called?

Description : What is the lending of money at interest rates higher than the legal limits called?

Last Answer : What is the answer ?

The cost of borrowing is equal to marginal propensity to consume. 21. Investment is (a) An injection that increases aggregate demand (b) An withdrawal that increases aggregate demand © An injection that decreases aggregate demand (d) An withdrawal that decreases aggregate demand

Description : The cost of borrowing is equal to marginal propensity to consume. 21. Investment is (a) An injection that increases aggregate demand (b) An withdrawal that increases aggregate demand © An injection that decreases aggregate demand (d) An withdrawal that decreases aggregate demand

Last Answer : a) An injection that increases aggregate demand

Is there a relatively safe way to have a 10% return on invested money in this economy?

Description : Is there a relatively safe way to have a 10% return on invested money in this economy?

Last Answer : eden2eve: I suggest an investment in pine-trees. They take about 45 years to mature but the return is pretty close to 10% over the life of the investment and they are relatively safe. You can lose ... to develop a good relationship with a forester to show you the ropes, mark trees for thinning, etc.

Economies of a firm are : (1) An increase in its profits (2) A reduction in its selling expenses (3) Its dominance of the market (4) Saving in it's production costs

Description : Economies of a firm are : (1) An increase in its profits (2) A reduction in its selling expenses (3) Its dominance of the market (4) Saving in it's production costs

Last Answer : (4) Saving in it's production costs Explanation: Economics of a firm includes how it combines labour and capital so as to lower the average cost of output, either from increasing, decreasing, or constant returns ... of a good or a service on a larger scale, yet with (on average) less input costs.

Gross Profit means - (1) Total investment over total saving (2) Changes in methods of production (3) Changes in the form of business organisation (4) Total receipts over total expenditure

Description : Gross Profit means - (1) Total investment over total saving (2) Changes in methods of production (3) Changes in the form of business organisation (4) Total receipts over total expenditure

Last Answer : (4) Total receipts over total expenditure Explanation: In accounting, gross profit or sales profit is the difference between revenue and the cost of making a product or providing a service, before deducting ... . Gross profit = Net sales (total receipts) - Cost of goods sold (total expenditure).