If the Interest Rate Increases, Then The

question 45

Multiple Choice

If the interest rate increases, then the:

• A) economy will move to a new point along the existing consumption function.
• B) consumption function will shift upward.
• C) investment demand curve will shift downward.
• D) investment demand curve will shift upward.

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Definitions:

Cash Substitute

Forms of payment other than traditional cash, such as credit cards, debit cards, or electronic transfers, that are used as alternatives to cash.

Certificate Of Deposit

A financial product offered by banks and credit unions that provides an interest rate premium in exchange for the customer agreeing to leave a lump-sum deposit untouched for a predetermined period of time.

Bank

is NO.

Payee

The individual or entity to whom a payment is directed or owed.