An Increase in the Domestic Interest Rate Relative to Other

question 96

Multiple Choice

An increase in the domestic interest rate relative to other interest rates should

• A)increase investment spending.
• B)decrease consumption spending.
• C)increase government spending.
• D)increase net exports.

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Definitions:

Risky

Involving or exposed to a high degree of uncertainty or subject to potential loss.

Prime Rate

The lowest interest rate that banks generally charge their best customers.

Banks

Financial institutions licensed to accept deposits, make loans, and offer various financial services to individuals and businesses.

Specialty Retailers

Stores or businesses that focus on specific product categories, offering a narrow but deep assortment of merchandise.