According to Classical Economists, a Decrease in the Rate of Interest

question 168

Multiple Choice

According to classical economists, a decrease in the rate of interest will

• A) increase unemployment.
• B) increase consumer saving.
• C) increase investment.
• D) increase the inflation rate.

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Definitions:

Trade

The activity of buying, selling, or exchanging goods and services between people, firms, or countries.

Comparative Advantage

The ability of a country or firm to produce a particular good or service at a lower opportunity cost than its trade partners.

Opportunity Cost

The cost of foregoing the next best alternative when making a decision. It represents the benefits an individual, investor, or business misses out on when choosing one alternative over another.

Production Possibilities Frontier

A graphical representation showing the maximum quantity of two goods or services that an economy can produce when all resources are used efficiently.