If the Real Interest Rate in the Economy Is I

question 65

Multiple Choice

If the real interest rate in the economy is i and the expected rate of return on additional investment is r, then, other things equal,

• A) more investment will be forthcoming when i exceeds r.
• B) less investment will be forthcoming when r rises.
• C) r will fall as more investment is undertaken.
• D) r will exceed i at all possible levels of investment.

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Definitions:

Consensus Cue

A social influence where the agreement among multiple parties or sources enhances the perceived validity of information or decisions.

Situational Factors

External elements or circumstances that can influence individuals' behavior and decision-making processes.

Fundamental Attribution Error

The tendency to overemphasize personal traits and underestimate situational factors when explaining someone else's behavior.

Dispositionally

Pertaining to or resulting from one's inherent qualities of mind and character.