Other Things Equal, a Rise in Interest Rates Can Be

question 172

Multiple Choice

Other things equal, a rise in interest rates can be expected to:

• A)increase the quantity of investment.
• B)decrease the quantity of investment.
• C)have no effect upon the quantity of investment.
• D)increase equilibrium income.

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Definitions:

Rate-Of-Return Regulation

Maximum price allowed by a regulatory agency is based on the (expected) rate of return that a firm will earn.

Economic Efficiency

A state where resources are optimally allocated to serve each individual or entity in the best way while minimizing waste and inefficiency.

Monopolist

An individual or entity that has the exclusive control or possession of the supply or trade in a commodity or service, allowing them to manipulate the market.

Selling Price

Selling price is the amount of money that a seller is willing to accept in exchange for a good or service it provides to buyers.