CAF-7 · Chapter 3 · Question 3 of 15
A manufacturing firm decides to delay its plans to purchase new, expensive assembly line machinery because the central bank has drastically increased interest rates, making bank loans much more expensive. This decision is a direct result of which macro-environmental factor?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) Economic factor
Explanation
Interest rates, inflation, and economic cycles are fundamental macroeconomic indicators. An increase in interest rates raises the cost of borrowing, directly impacting a firm's capital investment decisions under the Economic factor.
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