An Increase in Interest Rates Would

question 64

Multiple Choice

An increase in interest rates would:

• A) decrease autonomous spending.
• B) increase spending dependent on income.
• C) increase autonomous spending.
• D) decrease spending dependent on income.

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Definitions:

Spreading the Overhead

The practice of distributing fixed costs over a variety of products, projects, or business units to ensure efficiency and reduce the overall cost per unit.

Economies of Scale

The cost advantage that arises with increased output of a product, as the fixed costs are spread over more units of production.

Diseconomies of Scale

This occurs when a company grows so large that the costs per unit increase.

Levels of Output

Levels of output refer to the quantity of goods or services produced by a firm or industry over a specific period.