Which of the Following Happens If the Real Interest Rate

question 70

Multiple Choice

Which of the following happens if the real interest rate in an economy rises?

• A) Consumption increases.
• B) Investment falls.
• C) Labor demand increases.
• D) Labor supply falls.

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Definitions:

Lump Sum

A singular transaction carried out at a specific point in time, as opposed to a sequence of smaller installments.

Savings

Money set aside for future use, often accumulating interest in a financial institution.

Rate of Return

The profit or deficit generated from an investment over an indicated time frame, shown as a ratio of the investment's initial cost.

Investments

Items or resources purchased with the aim of earning revenue or increasing in value as time progresses.