Usually, a Country with a Rapid Increase in Its Interest

question 194

Multiple Choice

Usually, a country with a rapid increase in its interest rate also sees

• A) depreciation of its currency.
• B) appreciation of its currency.
• C) no change in the value of its currency.
• D) pressure to move to the gold standard.

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Definitions:

APC (Average Propensity to Consume)

The fraction of income that is spent on consumption as opposed to savings.

Disposable Income

The amount of money available to households for making purchases and savings after the removal of income taxes.

Saving

The act of setting aside a portion of current income for future use, or the portion of income not spent on current expenditures.

MPC (Marginal Propensity to Consume)

The proportion of additional income that is spent on consumption.