If the Market Interest Rate Increases, Then

question 128

Multiple Choice

If the market interest rate increases, then

• A)the cost of borrowing increases and so saving falls
• B)the opportunity cost of consuming a good in the future increases and saving, therefore, increases
• C)the opportunity cost of consuming a good in the future increases and saving, therefore, falls
• D)the reward for saving diminishes and so present consumption increases
• E)the reward for saving increases and so saving increases

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Definitions:

Traveler's Checks

A preprinted, fixed-amount check designed to allow the person signing it to make an unconditional payment to someone else as a result of the payee's acceptance.

Credit Card

A payment card issued by financial institutions that allows the cardholder to borrow funds for purchases or cash advances, subject to a line of credit.

Loan Issuer

An entity, such as a bank or financial institution, that provides loans to borrowers under agreed terms and conditions.

Debit Cards

A payment card that deducts money directly from a consumer's checking account to pay for a purchase, unlike credit cards which borrow money that must be repaid.