Other Things Equal, a Decrease in the Real Interest Rate

question 93

Multiple Choice

Other things equal, a decrease in the real interest rate will

• A) expand investment and shift the AD curve to the left.
• B) expand investment and shift the AD curve to the right.
• C) reduce investment and shift the AD curve to the left.
• D) reduce investment and shift the AD curve to the right.

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Definitions:

Just-noticeable Difference

The smallest change in the intensity of a stimulus that can be detected by a sensory system.

Sensory Adaptation

A decrease in sensitivity to a constant level of stimulation.

Absolute Threshold

The smallest amount of physical stimulation required to detect a sensory input half of the time it is present.

Signal Detection

A theory and method for quantifying the ability to differentiate between information-bearing patterns and random patterns that distract from the information.