If the Real Interest Rate Is Below Equilibrium, Which of the Following

question 55

Multiple Choice

If the real interest rate is below equilibrium, which of the following is likely to occur?

• A)​Lenders will raise their interest rates which will encourage saving.
• B)​Lenders will raise their interest rates which will encourage borrowing.
• C)​Lenders will lower their interest rates which will encourage saving.
• D)​Lenders will lower their interest rates which will encourage borrowing.

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Definitions:

False Consensus

The tendency to overestimate how much other people agree with our own beliefs, behaviors, and attitudes.

Desirable Characteristics

Qualities or traits that are considered attractive, valuable, and sought-after in individuals or items.

False Consensus Effect

The cognitive bias that leads an individual to overestimate how much other people agree with them or share their beliefs and behaviors.

False Uniqueness Effect

The tendency to underestimate the number of other people who share one’s most prized characteristics and abilities.