Which of the Following Best Describes the "Interest Rate Effect

question 138

Multiple Choice

Which of the following best describes the "interest rate effect"?

• A)An increase in the price level raises the interest rate and chokes off government spending.
• B)An increase in the price level lowers the interest rate and chokes off government spending.
• C)An increase in the price level raises the interest rate and chokes off investment and consumption spending.
• D)An increase in the price level lowers the interest rate and chokes off investment and consumption spending.
• E)An increase in the price level raises the unemployment rate and chokes of interest in participating the in labour market.

---

Definitions:

Book Value

The net value of a company's assets minus its liabilities, often used to assess the company's worth on its financial statements.

Facility

A physical or virtual space or infrastructure used for a specific purpose, often related to manufacturing or services.

CCA Class

A classification in Canadian tax law, standing for Capital Cost Allowance, that determines the depreciation rate for various types of property for tax purposes.

Fixed Assets

Long-term tangible assets that are used in the operations of a business and are not expected to be consumed or converted into cash in the short term.