The Effect of an Increase in Interest Rates on Current

question 13

Multiple Choice

The effect of an increase in interest rates on current consumption is

• A) positive among borrowers if the income effect is dominant
• B) positive among borrowers if the substitution effect is dominant
• C) positive among savers if the income effect is dominant
• D) positive among savers if the substitution effect is dominant
• E) strongly positive in the aggregate consumption data

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Definitions:

Silver Acetate

A chemical compound with the formula AgC2H3O2, used in plating and as a photographic agent.

NaCl

Sodium chloride, commonly known as table salt, an ionic compound consisting of sodium and chloride ions.

AgCl

Silver chloride, a white crystalline solid that is photosensitive and less soluble in water.

Spectator Ions

Ions that are present in a chemical reaction but do not participate in it, remaining unchanged throughout the reaction.