During an Economic Slump, Policies That Lower Interest Rates May

question 133

Multiple Choice

During an economic slump, policies that lower interest rates may not actually boost investment because

• A) lower interest rates tend to discourage investment, all other things unchanged.
• B) investment is never affected by interest rate changes.
• C) of pessimistic expectations by businesses about the future of the economy.
• D) taxes may have been decreased during a recessionary period.

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Definitions:

Chromatography

A method used to separate and analyze components of a mixture by passing it through a medium where components move at different rates.

Slightly Different Speed

A variation in velocity, indicating a small but noticeable change in the rate of motion compared to another object or compared to a previous state.

Neutrons

Subatomic particles found in the nucleus of an atom, having no electric charge and a mass about equal to that of protons.