An Increase in the Rate of Interest Causes Consumers to Save

question 12

Multiple Choice

An increase in the rate of interest causes consumers to save due to the substitution effect, and save__________ due to the income effect.

• A) less; less
• B) more; less
• C) less; more
• D) more; more

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Definitions:

Negative Reinforcement

A behavioral principle where the removal of an unpleasant stimulus following a desired behavior increases the likelihood of the behavior occurring again.

Positive Reinforcement

A method of strengthening desired behaviors by presenting a desirable stimulus after the behavior occurs.

Probability

A measure or estimation of how likely it is that an event will occur, expressed as a number between 0 and 1, where 1 denotes certainty.

Avoidance Learning

A learning process by which an individual learns a behavior or response to avoid an unpleasant stimulus or situation.