For a Borrower, an Increase in the Real Interest Rate

question 12

Multiple Choice

For a borrower, an increase in the real interest rate

• A)definitely reduces current consumption and future consumption.
• B)has an uncertain effect on both current and future consumption.
• C)has an uncertain effect on current consumption and increases future consumption.
• D)definitely reduces current consumption and increases future consumption.
• E)reduces current consumption and has an uncertain effect on future consumption.

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Definitions:

Harlow

Refers to Harry Harlow, a psychologist known for his research on maternal separation and social isolation in rhesus monkeys.

Vygotsky

Lev Vygotsky, a Russian psychologist known for his theory on social development and the concept of the Zone of Proximal Development.

Formal Operations

The stage in Piaget’s theory of cognitive development where adolescents and adults develop the ability to think about abstract concepts and logically test hypotheses.

Concrete Operations

A stage in cognitive development, according to Piaget, where children gain the ability to think logically about concrete events.