Other Things Constant, If There Is an Increase in the Demand

question 101

Multiple Choice

Other things constant, if there is an increase in the demand for goods now compared to goods in the future, we would expect that the

• A) real interest rate would decline.
• B) capital investment rate would decline.
• C) current rate of saving would increase.
• D) real interest rate would rise.

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Definitions:

Payment

The transfer of money, goods, or services from one party to another in exchange for something of value, often fulfilling a contractual obligation or debt.

Interest Rates

The expense associated with acquiring a loan, usually represented as a proportion of the sum lent.

Better Off

A condition in which an individual or group's situation improves in terms of economic welfare, happiness, or other measures of well-being.

Present Value

The current value of a future sum of money or stream of cash flows, given a specified rate of return.