Given a Decrease in the Real Interest Rate,the Income Effect

question 60

Multiple Choice

Given a decrease in the real interest rate,the income effect will be ________ for lenders and ________ for borrowers.

• A) negative; negative
• B) ambiguous; positive
• C) positive; ambiguous
• D) positive; negative

---

Definitions:

Materials

Substances or components required in the production of goods or in the provision of services.

Weighted-Average Method

An inventory costing method that calculates the cost of goods based on the average cost of all similar items in inventory.

Processing Cost

The expenses related to the production or manufacturing of goods, including labor, materials, and overhead costs.

Equivalent Unit

A measure used in cost accounting to express the amount of work done on unfinished products in terms of fully completed units.