A Rise in the Real Interest Rate ________ Consumption Expenditure

question 207

Multiple Choice

A rise in the real interest rate ________ consumption expenditure and ________.

• A) increases; shifts the consumption function upward
• B) decreases; shifts the consumption function downward
• C) increases; shifts the consumption function downward
• D) decreases; shifts the consumption function upward
• E) decreases; results in a movement downward along the consumption function

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Definitions:

Tenth Amendment

An amendment to the U.S. Constitution stating that the powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.

Federal Government

The national government of the United States, composed of three branches: legislative, executive, and judicial.

Lower-Level Governments

Administrative divisions within a country that operate below the level of the central government, such as states or provinces.

Direct Taxation

Taxes that are imposed directly on an individual's income or wealth, and on corporations' profits.