Which of the Following Correctly Describes the Interest-Rate Effect

question 8

Multiple Choice

Which of the following correctly describes the interest-rate effect?

• A) If the price level decreases, consumer purchasing power decreases, the demand for credit rises, interest rates rise, debt-financed borrowing decreases, and real GDP demanded falls.
• B) If the price level decreases, consumer purchasing power increases, the demand for credit rises, interest rates rise, debt-financed borrowing decreases, and real GDP demanded falls.
• C) If the price level decreases, consumer purchasing power increases, the demand for credit falls, interest rates rise, debt-financed borrowing decreases, and real GDP demanded falls.
• D) If the price level decreases, consumer purchasing power increases, the demand for credit falls, interest rates fall, debt-financed borrowing increases, and real GDP demanded increases.

Differentiate between liquidated and unliquidated debts and their implications on accord and satisfaction.

Recognize exceptions to the rule requiring consideration, including promissory estoppel and modifications under the UCC.

Distinguish between bilateral and unilateral contracts and their respective considerations.

Assess the role of adequacy of consideration in contract enforcement and exceptions related to fraud.

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Definitions:

Primary Reinforcers

Innate rewarding stimuli that fulfill basic biological needs or desires, such as food, water, and comfort, which do not require learning to be effective.

Shaping

A method of behavior training in which reinforcement is given for progressively closer approximations of the desired behavior.

Ratio Schedule

In behavior modification, a reinforcement schedule that provides rewards after a certain number of responses, encouraging consistent behavior.

Interval Schedule

A type of reinforcement schedule in operant conditioning that delivers a reward after a variable or fixed interval of time has passed.