A Decrease in Investment Demand

question 226

Multiple Choice

A decrease in investment demand:

• A) results in the same equilibrium as an increase in savings.
• B) decreases both the amount saved and the interest rate.
• C) increases the amount saved but decreases the interest rate.
• D) increases the supply of savings.

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Definitions:

Probability

The measure of the likelihood that an event will occur, expressed as a number between 0 and 1.

Spurious Relationships

An apparent but false relationship between two variables that is actually caused by a third variable.

Selection Bias

A distortion in the analysis resulting from the method of collection of data, where the sample is not representative of the population being studied.

Experimental Groups

Groups in an experiment that receive the treatment or intervention being tested.