Consumption Can Be Sensitive to Changes in the Real Interest

question 55

Multiple Choice

Consumption can be sensitive to changes in the real interest rate because:

• A) higher interest rates can increase the cost of durable goods like automobiles.
• B) higher interest rates will result in less saving.
• C) lower real interest rates will decrease spending on durable goods and increase spending on non-durable goods.
• D) lower interest rates increase savings.

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Definitions:

Demand Curve

A graphical representation showing the relationship between the price of a good and the quantity demanded, usually depicted as downward sloping.

Slopes Downward

Used to describe a graph line that indicates a decrease in one variable as another variable increases, often related to demand curves in economics.

Nondiscriminating Monopolist

A nondiscriminating monopolist refers to a monopolist who charges the same price for each unit of the product sold to all consumers, unlike price discrimination where different prices are charged to different consumers.

Demand Curve

A graph demonstrating how the quantity of a good or service demanded varies with its price, typically downward sloping.