If Autonomous Investment Expenditures Decline Because of Higher Interest Rates

question 102

Multiple Choice

If autonomous investment expenditures decline because of higher interest rates

• A)income increases
• B)the rate of return declines
• C)autonomous consumption declines
• D)aggregate demand increases
• E)aggregate demand decreases

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Definitions:

Interest Rate

The percentage of an amount of money charged for its use, indicating the cost of borrowing money or the return on invested savings.

Savings Exceeds Investment

A situation in which the amount saved by households or organisations is greater than the amount being invested within the economy.

Recession

A recession is a significant decline in economic activity spread across the economy, lasting more than a few months, typically visible in GDP, real income, employment, industrial production, and wholesale-retail sales.

Interest Rate

The amount charged by a lender to a borrower for the use of assets, expressed as a percentage of the principal, over a specific period.