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What Does an Increase in the Interest Rate Cause

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What does an increase in the interest rate cause?


Definitions:

Automatic System

A cognitive system that operates quickly and without conscious effort, responsible for fast and intuitive reactions and judgements.

Conscious System

Refers to the parts of the mind that are aware of surroundings, thoughts, and feelings at any given moment.

Planning Fallacy

The tendency for plans to be overly optimistic because the planner fails to allow for unexpected problems.

Overly Optimistic

Describes a tendency to hold a rosier outlook than reality might support, often resulting in unrealistic expectations.

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