Question

It is most likely that a firm would borrow funds to expand its capital facilities when the multiple choice pure rate of interest is greater than the real rate of interest. demand for money is

Answer 1

It is most likely that a firm would borrow funds to expand its capital facilities when the expected rate of return is greater than the interest rate. The rate of return is the gain or loss on an investment over time. The rate of return is aways displayed as a percentage. The interest rate is the amount of money added to the borrow funds that is paid directly to the lender. The interest rates can fluctuate and are expressed as a percentage by the lender.