As Economic Recovery Begins After a Period of Recession, Consumer

question 166

True/False

As economic recovery begins after a period of recession, consumer purchasing power increases but consumers often cautiously restrain their willingness to buy.

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Definitions:

Real Interest Rate

The rate of interest an investor, saver, or lender receives (or expects to receive) after allowing for inflation.

Capital Investment

The spending of money on resources intended to benefit a business in the long term, such as by acquiring assets or improving infrastructure.

Inflationary Premium

The portion of interest rates or returns that compensates investors for the anticipated erosion of purchasing power due to inflation.

Money Rate

Often referring to the interest rates in financial markets; the cost of borrowing money.