A Decrease in the Interest Rate, Other Things Being Equal

question 68

Multiple Choice

A decrease in the interest rate, other things being equal, causes a(n) :

• A) upward movement along the demand curve for money.
• B) downward movement along the demand curve for money.
• C) rightward shift of the demand curve for money.
• D) leftward shift of the demand curve for money.

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Definitions:

Consumer Equilibrium

The point at which the quantity of goods consumed by a consumer maximizes their utility, given their budget constraints.

Marginal Utility Per Dollar

The additional satisfaction or utility gained from spending one more dollar on a good or service.

Consumer Equilibrium

A state where the consumer has allocated their resources in such a way that maximizes their utility, given their budget constraint.

Income And Substitution Effects

The changes in quantity demanded of a good due to a change in income (income effect) or a change in price leading consumers to substitute one good for another (substitution effect).