If Interest Rates Rise

question 163

Multiple Choice

If interest rates rise,

• A) foreign entities that are borrowers of funds will borrow less.
• B) governments that are savers of funds will save less.
• C) households that are savers of funds will save more.
• D) businesses that are savers of funds will borrow less.
• E) it will reduce consumption smoothing.

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Definitions:

Oligopoly

An economic setup in which a handful of companies possess substantial influence on determining market prices and competitive dynamics.

Mutual Interdependence

A situation often seen in oligopolistic markets where the actions of one firm directly affect the decisions and outcomes of others.

Oligopolistic Industry

An industry characterized by a small number of firms whose decisions about pricing and output affect each other, often leading to strategic behavior.

Low Barriers

Refers to the minimal obstacles or constraints in entering a market or sector, allowing for easier access for new competitors.