A Decrease in the Market Interest Rate Will _____

question 55

Multiple Choice

A decrease in the market interest rate will _____

• A) increase investment for individual firms, so total investment in the economy increases.
• B) increase investment for individual firms, so total investment in the economy decreases.
• C) decrease investment for individual firms, so total investment in the economy increases.
• D) decrease investment for individual firms, so total investment in the economy is decreases.
• E) not change investment for individual firms, so total investment in the economy is unchanged.

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Definitions:

Consumer Surplus

The difference between the total amount that consumers are willing and able to pay for a good or service versus the total amount they actually pay.

Producer Surplus

The difference between what producers are willing to accept for a product versus what they actually receive in the market.

Marginal Benefit

The increased benefit or value received from the consumption or creation of one more unit of a good or service.

Marginal Cost

The investment required to manufacture an additional unit of a product or service.