If the Real Interest Rate Rises, People

question 104

Multiple Choice

If the real interest rate rises, people

• A) save more.
• B) save less.
• C) decrease their expected future income.
• D) earn a higher real wage rate.

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Definitions:

Sales of Investments

Transactions involving the disposal of investment assets, such as stocks, bonds, or real estate, often to realize gains or for strategic portfolio adjustments.

Interest on Loans

The cost paid by a borrower to a lender for the use of borrowed money, typically expressed as an annual percentage rate.

Direct Method

A cash flow statement preparation method that lists specific cash inflows and outflows relating directly to operations.

Inventory Increase

Occurs when the ending inventory is greater than the beginning inventory, reflecting a net addition to stock through purchases or production.