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:

Distributive Bargainers

Negotiators who view the process as a fixed pie where any gain by one party is made at the expense of the other, promoting competitive tactics.

Resistance Point

The minimum outcome that a party is willing to accept during a negotiation, beyond which they will walk away from the table.

Fait Accompli

A situation or action that has already been completed and is irreversible, often presented to others as an accomplished event.

Bargaining Range

The spectrum of possible agreements in a negotiation process, bounded by the least favorable terms acceptable to each party.