In the Saving-Investment Diagram, an Increase in Output Will Lead

question 53

Multiple Choice

In the saving-investment diagram, an increase in output will lead to

• A)a reduction in saving and a rise in the real interest rate.
• B)an increase in saving and a fall in the real interest rate.
• C)a reduction in saving and a fall in the real interest rate.
• D)an increase in saving and a rise in the real interest rate.

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Definitions:

Fixed Rate

A constant interest rate for a loan or mortgage that remains unchanged for the entire term of the loan or for a set period.

Variable Rate

An interest rate that changes periodically over the lifetime of the loan based on an underlying benchmark or index.

Prime Rate

The interest rate that banks charge their most creditworthy customers, often used as a benchmark for other loans.

Risk Profile

An assessment of an entity's or individual's willingness to take risks, as well as the threats to which they are exposed.