If the Interest Rate Increases, Then

question 53

Multiple Choice

If the interest rate increases, then

• A)households will decrease their level of saving.
• B)the supply of loanable funds will fall because it now costs more to borrow funds and people who were supplying the funds will realize that fewer people will be willing to borrow their funds.
• C)households will consume less and save more.
• D)government will consume more because it now costs more to borrow funds to buy goods.

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Definitions:

Latent Meaning

The underlying or hidden significance of a message, as opposed to its overt or explicit meaning.

Unconscious Wishes

Desires or motivations that an individual is not fully aware of but influence behaviors and emotions.

Dream Theorist

An individual, often a psychologist or a neuroscientist, who studies the origin, mechanism, and meaning of dreams.

REM Sleep

A phase of sleep characterized by rapid eye movement, vivid dreaming, and increased brain activity.