An Increase in the Interest Rate Will

question 39

Multiple Choice

An increase in the interest rate will:

• A) increase the amount of money borrowed by firms.
• B) decrease the amount of money borrowed by firms.
• C) have an ambiguous effect on the amount of money borrowed by firms.
• D) have no effect on the amount of money borrowed by firms.

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Definitions:

Self-Interest

The personal interest or advantage that individuals seek to maximize their own welfare or benefit.

Public Good

A product or service that is available for all people to consume, regardless of who pays for it, and where one person's consumption does not reduce availability to others.

Adam Smith

A Scottish economist and philosopher, best known for his book "The Wealth of Nations," in which he laid the foundations of classical free market economic theory.

Karl Marx

A 19th-century philosopher, economist, and political theorist best known for his theories about capitalism and communism.