Consider an Exogenous Increase in the Real Interest Rate in the Simple

question 38

Multiple Choice

Consider an exogenous increase in the real interest rate in the simple macro model. This will tend to cause
In desired consumption and in desired investment.

• A) an increase; an increase
• B) an increase; a decrease
• C) a decrease; a decrease
• D) a decrease; no change
• E) a decrease; an increase

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Definitions:

Wealth

The accumulation of valuable economic resources and assets, including property, investments, and cash, that an individual or entity possesses.

Roundabout Trade

Trade involving multiple countries where goods are exported to one country before being re-exported to the final destination.

Double-Coincidence

The situation in a barter economy where two parties each hold an item the other wants, enabling an exact exchange without the need for a medium of exchange.

Commodity Money

Money whose value comes from a commodity of which it is made, such as gold and silver, used historically as a medium of exchange.