A Lower Real Interest Rate ________ Investment Spending and ________

question 53

Multiple Choice

A lower real interest rate ________ investment spending and ________ consumption spending.

• A)increases; increases
• B)increases; decreases
• C)decreases; decreases
• D)decreases; increases

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Definitions:

Economic Profit

The gap in financial terms between total earnings and all financial burdens, considering both express and tacit costs.

Short Run

A period of time during which at least one of a firm's inputs is fixed, limiting the firm's ability to adjust to changes in demand or production costs.

Perfectly Competitive Firm

A firm operating in a market where there are many buyers and sellers, with none being able to influence the market price of the product.

Marginal Cost

The charges incurred from the production of an extra unit of a product or service.