When the Real Interest Rate Increases,the Demand for Current Consumption

question 44

Multiple Choice

When the real interest rate increases,the demand for current consumption

• A) shifts up.
• B) remains constant.
• C) moves along the demand curve.
• D) shifts down.
• E) increases for each level of current income.

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Definitions:

LIBOR

The London Interbank Offered Rate, representing the interest rate banks charge each other for short-term loans.

Treasury-Bill Rate

The yield or interest rate on U.S. government short-term debt instruments, such as treasury bills, which are considered among the safest investments.

Banned

Prohibited by regulation or law from being sold, used, or practiced, often due to safety, health, or ethical concerns.

Nonfinancial Businesses

Enterprises primarily engaged in the production or supply of goods and services, excluding those in the financial services sector like banks or investment companies.