Which of the Following Factors Would Be Most Likely to Lead

question 30

Multiple Choice

Which of the following factors would be most likely to lead to an increase in interest rates in the economy?

• A) Households reduce their consumption and increase their savings.
• B) The Federal Reserve decides to try to stimulate the economy.
• C) There is a decrease in expected inflation.
• D) The economy falls into a recession.
• E) Most businesses decide to modernize and expand their manufacturing capacity,and to install new equipment to reduce labor costs.

---

Definitions:

Short Run

In economics, a period during which at least one factor of production is fixed and cannot be changed, limiting adjustments to changes in demand or technology.

Average Total Cost

The total cost of production (fixed and variable costs) divided by the number of units produced, indicating the cost per unit of output.

Specialization

A strategy where individuals or entities concentrate on a narrow range of production tasks, aimed at increasing efficiency and expertise.

Quantity Discounts

Price reductions based on the amount of a product purchased, incentivizing buyers to purchase in larger volumes.