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Question
High rates of interest in a low inflation region
Options:
A .  create atmosphere for capital formation
B .  discourage people to make an investment
C .  attract people to make an investment
D .  are not favourable for credit expansion
Answer: Option C
Answer: (c)Higher interest rates in low inflation means higher real returns not just on money, but on all other assets too. These higher real returns increases the allocation of investment by people.

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