Other Things Equal, an Increase in the Equilibrium Interest Rate

question 114

Multiple Choice

Other things equal, an increase in the equilibrium interest rate will

• A)increase R&D spending.
• B)rise when the supply of loanable funds increases.
• C)decrease purchases of capital goods and reduce R&D spending.
• D)increase bank lending.

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Definitions:

No Interest

This term describes financial agreements or products that do not accrue interest.

Postpone

To delay an event or action to a later time.

Per Annum

Annually or per year, often used in the context of interest rates or salaries.

Term Deposit

A type of bank deposit that has a fixed term and typically offers a higher interest rate than savings accounts.