A Higher Real Interest Rate ________ Saving and ________ Consumption

question 92

Multiple Choice

A higher real interest rate ________ saving and ________ consumption spending.

• A)increases; increases
• B)increases; decreases
• C)does not change; does not change
• D)decreases; increases

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Definitions:

Central Government

The government entity or authority that holds the highest level of governance within a nation, responsible for national policies and administration.

Consumer Sovereignty

The theory that consumer preferences and choices dictate the production and sale of goods and services in a market.

Laissez-Faire Economy

An economic system where transactions between private parties are free from government intervention such as regulations, privileges, tariffs, and subsidies.

Command Economy

An economic system where the government makes all decisions on the production and consumption of goods and services.