The Substitution Effect of a Decrease in Real Interest Rates

question 60

Multiple Choice

The substitution effect of a decrease in real interest rates is to cause a consumer to

• A)increase future consumption and decrease current consumption.
• B)decrease future consumption and increase current consumption.
• C)increase current consumption and increase saving.
• D)decrease current consumption and increase saving.

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Definitions:

Collective Unconscious

A concept in analytical psychology proposing the existence of a segment of the unconscious mind that is shared among beings of the same species, housing archetypes and collective memories.

Carl Jung

A Swiss psychiatrist and psychoanalyst who founded analytical psychology, emphasizing the importance of the individual psyche and the personal quest for wholeness.

Gender-schema Theory

A theory that explains how individuals become gendered in society and how sex-linked characteristics are maintained and transmitted to other members of a culture.

Social Cognitive Theory

A learning and social behavior theory suggesting that people can learn new actions by watching and mimicking others.