Interest Sensitive Consumption Is Negatively Impacted by Interest Rates Because

question 100

Multiple Choice

Interest sensitive consumption is negatively impacted by interest rates because when you

• A)pay cash for something, the price you really pay depends on the interest rate.
• B)buy something on installments (like a car)your payments are positively related to the interest rate so a higher interest rate would mean a higher payment, and therefore, less interest sensitive consumption.
• C)buy something on installments (like a car)your payments are negatively related to the interest rate so a higher interest rate would mean a higher payment, and therefore, less interest sensitive consumption.
• D)buy something you really need, the price you really pay depends on the interest rate.

Comprehend the function and impact of exchange rates on international trade.

Understand the role of net investment income in a country's financial account.

Diagnose the differences between current and capital accounts in the balance of payments.

Distinguish between credits and debits in the balance of payments' accounting.

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Definitions:

Voluntary

Done, given, or acting of one's own free will without coercion or obligation.

Attachment

The point at which a creditor becomes the secured party that has a security interest in the collateral.

Secured Party

A lender or creditor who has an interest, typically a lien, in the collateral offered by the debtor in a secured transaction.

Collateral

Assets that a borrower offers to a lender to secure a loan, which the lender may seize in the event of loan default.