In General, the Direction of the Change in Interest Rates

question 11

Multiple Choice

In general, the direction of the change in interest rates will

• A)follow the direction of the change in inflationary expectations.
• B)not be affected by the direction of the change in inflationary expectations.
• C)go the opposite direction of the change in inflationary expectation.
• D)either go in the opposite direction of the change in inflationary expectations or remain the same.

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Definitions:

Marginal Productivity

The additional output that is produced by using one more unit of a factor of production, keeping all other factors constant.

Income Distribution

The way in which a nation’s total income is distributed among its population.

Factor Markets

Markets where services of the factors of production (land, labor, capital) are bought and sold.

Maximize Profit

The process or strategy undertaken by businesses to increase their net earnings and achieve the highest possible profit margin.