An Increase in the Real Interest Rate Causes

question 4

Multiple Choice

An increase in the real interest rate causes

• A) the IS curve to shift to the right.
• B) the IS curve to shift to the left.
• C) a movement up the IS curve.
• D) a movement down the IS curve.

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Definitions:

Marginal Revenue

The additional revenue that a firm receives from selling one more unit of a good or service.

Economic Profit

The discrepancy between gross revenue and comprehensive costs, inclusive of both apparent and implied expenses.

Marginal Cost

The supplementary cost associated with manufacturing one more unit of a good or service.

Decreasing Its Output

A strategy or condition where a firm reduces the quantity of goods or services it produces, often in response to lower demand or to increase prices.