An Increase in Interest Rates

question 225

Multiple Choice

An increase in interest rates

• A)decreases investment spending on machinery,equipment,and factories,but increases consumption spending on durable goods and net exports.
• B)decreases investment spending on machinery,equipment,and factories,and consumption spending on durable goods,but increases net exports.
• C)decreases investment spending on machinery,equipment,and factories,consumption spending on durable goods,and net exports.
• D)increases investment spending on machinery,equipment,and factories,consumption spending on durable goods,and net exports.

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Definitions:

Variance

In statistics, variance is a measure of how far a set of numbers is spread out from their average value. It's key in assessing variability and risk.

Risk Premium

The additional return expected by an investor for taking on a higher level of risk.

Risky Asset

An asset that has a significant degree of uncertainty in its returns, often leading to variability in its investment outcomes.

Normal Distribution

A statistical function that represents the distribution of many types of data; it’s symmetric and describes data that clusters around a mean or average.