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

question 9

Multiple Choice

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

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

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Definitions:

Loss

A financial term representing the amount by which expenses exceed revenues.

Acceptance

The agreement to the terms of an offer, contract, or document, thereby creating a legally binding obligation.

Income

The total amount of money received by a person or company during a certain period, usually from work, investments, or business activities.

Loss

A financial condition where total expenses exceed total revenues, resulting in a negative profit.