A Lower Interest Rate Increases Consumption, Investment, and _____, Which

question 161

Multiple Choice

A lower interest rate increases consumption, investment, and _____, which _____ aggregate demand.

• A) imports; increases
• B) imports; decreases
• C) exports; increases
• D) exports; decreases

---

Definitions:

Monopolistically Competitive

A market structure characterized by many firms selling differentiated products, allowing for some degree of market power.

Monopolistically Competitive

A business configuration in which various enterprises provide goods that are comparable, though not identical, affording them a measure of market dominance and the capacity to differentiate their products.

Economic Profit

The profit a company makes after deducting both its explicit (direct) and implicit (opportunity) costs; it's a more comprehensive measure than accounting profit.

Allocative Efficiency

The optimal distribution of resources in a market where goods and services are dispensed according to consumer preferences.