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2.2 How the macroeconomy works: the circular flow of income, aggregate demand/aggregate supply analysis and related concepts

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Question 39

Many corporate enterprises fund their capital expansion projects using retained earnings rather than securing bank loans. For these businesses, a significant fall in interest rates is most likely to

A

increase their capital investment because the opportunity cost of using retained earnings has decreased.

B

have no effect on their investment decisions because they do not rely on bank lending.

C

reduce their capital investment because the cost of borrowing has not changed for them.

D

encourage them to shift all their retained earnings into bank savings accounts to maximize returns.

Markscheme

2.2 How the macroeconomy works: the circular flow of income, aggregate demand/aggregate supply analysis and related concepts Questions

  1. A Level
  2. /Economics
  3. /2.2 How the macroeconomy works: the circular flow of income, aggregate demand/aggregate supply analysis and related concepts

222 exam-style questions on AQA A Level Economics 2.2 How the macroeconomy works: the circular flow of income, aggregate demand/aggregate supply analysis and related concepts, covering 2.2.1 The circular flow of income, 2.2.2 Aggregate demand and aggregate supply analysis, 2.2.3 The determinants of aggregate demand, 2.2.4 Aggregate demand and the level of economic activity, 2.2.5 Determinants of short-run aggregate supply, and 2.2.6 Determinants of long-run aggregate supply. Each one has a worked solution and a mark scheme showing where the marks go.

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