An Increase in the Interest Rate

question 30

Multiple Choice

An increase in the interest rate:

• A)makes consumption in period two relatively more expensive compared to consumption in period one.
• B)does not change relative cost of consuming in either period.
• C)makes consumption in period two relatively cheaper compared consumption in period one.
• D)discourages savings in each period.

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Definitions:

Credit

An accounting entry that increases liabilities or equity or decreases an asset or expense.

Signature Card

A form signed by a bank customer that the bank uses to verify signature authenticity on all checks.

Forgeries

Illegal alterations or productions of documents, currency, or other items with the intent to deceive.

Customer's Bank Account

The bank account of a customer, used for transactions between the customer and a company.