A Rise in Interest Rates Will Cause

question 60

Multiple Choice

A rise in interest rates will cause

• A)A decline in investment spending.
• B)A rise in investment spending.
• C)Investment spending to remain constant.
• D)Investment spending to be eliminated from the economy.

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Definitions:

Hyperinflation

An extremely high and typically accelerating inflation rate, causing a rapid erosion of currency's value.

Deflation

A decrease in the general price level of goods and services, often characterized by the increase in the value of money.

Disinflation

Disinflation is the process of slowing down the rate of inflation, indicating a reduction in the speed at which the general level of prices for goods and services is rising.

Wage-Price Spiral

A macroeconomic concept describing a situation where rising wages lead to increased prices, which in turn lead to demands for higher wages, thus perpetuating inflation.