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AP® Macroeconomics

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Loanable Funds & Business

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Suppose a business did an analysis and found that by borrowing money and purchasing new equipment at a total price of \$1000 it could increase its revenues by \$1050 and subsequent profits by \$100 per unit after taxes.

Given that scenario, which of the following is MOST likely to occur?

A

The business would not borrow the money.

B

The business would only borrow money if the interest rates fell lower.

C

The business would borrow the money no matter the interest rate; this is a demand shift right.

D

The business would borrow the money no matter the interest rate; this is a demand shift left.

E

The business would borrow the money no matter the interest rate; this is supply shift right.