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      Question

      Which of the following are likely to reduce investment

      expenditure?
      A Lower initial capital outlays on projects Correct Answer Incorrect Answer
      B A rise in the rate of interest Correct Answer Incorrect Answer
      C A fall in the rate of interest Correct Answer Incorrect Answer
      D More favourable business expectations and less uncertainty Correct Answer Incorrect Answer
      E None of these Correct Answer Incorrect Answer

      Solution

      A rise in the rate of interest reduces investment expenditure because it becomes more costly to invest.

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