When the Real Interest Rate Falls, the Consumption Function

question 32

Multiple Choice

When the real interest rate falls, the consumption function

• A)shifts upward.
• B)does not shift and there is a movement downward along the consumption function.
• C)does not shift and there is no movement along the consumption function.
• D)does not shift and there is a movement upward along the consumption function.
• E)shifts downward.

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Definitions:

Marginal Costs

represent the cost of producing one more unit of a good or service, calculated by the change in total cost that comes from producing one additional unit.

Economic Analysis

The study of how people use resources to produce goods and services for consumption and how those goods and services are distributed and consumed.

Government Policy

The plan of action or regulatory measures formulated and implemented by a governmental entity aimed at achieving specific goals or addressing certain issues within the society.

Median-Voter Model

A theory stating that the outcome of a majority-rule election is likely to reflect the preferences of the median voter.