An Increase in Interest Rates

question 215

Multiple Choice

An increase in interest rates

• A)decreases investment spending on machinery, equipment and factories, but increases consumption spending on durable goods and net exports.
• B)decreases investment spending on machinery, equipment and factories, and consumption spending on durable goods, but increases net exports.
• C)decreases investment spending on machinery, equipment and factories, consumption spending on durable goods, and net exports.
• D)increases investment spending on machinery, equipment and factories, consumption spending on durable goods, and net exports.
• E)decreases investment spending on machinery, equipment and factories, but increase net exports and consumption spending.

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Definitions:

Coupon Bond

A debt security that pays the holder periodic interest payments until maturity, at which point the principal is repaid.

Current Yield

The annual income from an investment expressed as a percentage of the current market price.

Trading

The act of buying, selling, or exchanging financial assets in markets with the goal of making profits from price movements.