If Real Interest Rates Decrease, We Generally Expect

question 104

Multiple Choice

If real interest rates decrease, we generally expect

• A)saving to increase.
• B)saving to decrease.
• C)consumption spending to decrease.
• D)no significant change in saving.

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Definitions:

Junk Bonds

High-yield bonds with a lower credit rating than investment-grade bonds, reflecting a higher risk of default.

Industrial-Development Bond

A government-issued bond to support the development of industrial projects, often tax-exempt for the buyer.

Revenue Bond

A type of municipal bond supported by the revenue from a specific project or source, rather than general tax revenues.

General-Obligation Bond

A type of municipal bond that is secured by the full faith and credit of the issuing government, including its taxing power to repay the bondholders.