As Interest Rates Increase the Price of an Asset or Liability

question 3

Multiple Choice

As interest rates increase the price of an asset or liability:

• A)remains constant
• B)decreases
• C)increases
• D)increases and it increases at a faster rate

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Definitions:

Equilibrium Price

The price at which the quantity of a good or service demanded by consumers equals the quantity supplied by producers.

Producer Surplus

The difference between the amount producers are willing to accept for a good or service and the actual amount they receive.

Underproduction

The condition where the output is less than what is economically or socially optimal.

Producer Surplus

The difference between the amount producers are willing to supply goods for and the actual amount they receive by selling them.