When Nominal Interest Rates Are Held Below Inflation Rates, Then

question 132

Multiple Choice

When nominal interest rates are held below inflation rates, then households will have an incentive to

• A)consume.
• B)save.
• C)purchase financial assets.
• D)postpone current consumption plans.

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Definitions:

Expectancies

Expectancies are beliefs about the likelihood of future events happening, which can influence behavior and outcomes.

Current Concern

A present matter or interest that occupies an individual's attention and thought.

Incentive

Something that motivates or encourages an individual to take action or endeavor to achieve a certain goal.

Drive

An internal motivational state that compels an organism to engage in specific behaviors to satisfy physiological needs.