An Increase in the Expected Real Interest Rate Will Have

question 25

Multiple Choice

An increase in the expected real interest rate will have a

• A)large negative impact on household saving.
• B)large positive impact on household saving.
• C)small positive impact on household saving.
• D)small negative impact on household saving.

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Definitions:

Consumption

The use of goods and services by households, often considered a primary economic indicator.

Rivals

Competitors within a market, vying for the same customers or resources in an effort to achieve economic or strategic advantages.

Market System

(1) An economic system in which individuals own most economic resources and in which markets and prices serve as the dominant coordinating mechanism used to allocate those resources; capitalism. Compare with command system. (2) All the product and resource markets of a market economy and the relationships among them.

Incentives

Rewards or penalties designed to influence the actions or behaviors of individuals or entities in desired ways.