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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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