Suppose Households Feel More Optimistic About the Future and Decide

question 14

Multiple Choice

Suppose households feel more optimistic about the future and decide to increase consumption. This rise in consumer confidence will cause:

• A) the natural real interest rate to rise.
• B) the natural real interest rate to fall.
• C) ambiguous effects on the natural real interest rate.
• D) no effect on the natural real interest rate.
• E) the natural real interest rate falls when the nominal rate falls.

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Definitions:

Legal

Pertaining to the law or the system of rules that a particular country or community recognizes as regulating the actions of its members.

Incidence

The occurrence, rate, or frequency of a disease, disorder, or event in a specified population over a particular period of time.

Small Population

A group of individuals or entities considered small in number within a larger context or comparison.

Epidemiological Study

A research investigation that aims to identify the patterns, causes, and control of diseases in groups of people.