According to the Interest Rate Effect,an Increase in the Price

question 147

Multiple Choice

According to the interest rate effect,an increase in the price level leads to ________ in the interest rate,and therefore to ________ in the quantity of aggregate demand.

• A) no change; no change
• B) a rise; a fall
• C) a rise; a rise
• D) a fall; a fall
• E) a fall; a rise

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Definitions:

Safety Of Principal

The assurance that an investment will be repaid or retained, primarily concerning the preservation of invested capital.

Diversified Portfolio

An investment strategy that involves spreading investments across various asset classes to reduce risk.

Investment Horizon

The length of time an investor expects to hold an investment before liquidating it.

Pension Funds

Investment pools that collect and invest funds contributed by employers and employees for the purpose of generating retirement benefits.