Changes in Future Expected Interest Rates Can Affect Current Consumption

question 17

Multiple Choice

Changes in future expected interest rates can affect current consumption.Suppose individuals expect future interest rates to decrease.Consumption will change as a result of this lower expected future interest rate because of its effects on which of the following?

• A)human wealth
• B)the value of stocks
• C)the value of bonds
• D)all of the above
• E) none of the above

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Definitions:

Laissez-Faire

An economic philosophy of free-market capitalism that opposes government intervention in business affairs, advocating for a "let do" or "let people do as they please" approach.

Consideration

Something of value given by both parties to a contract that induces them to enter into the agreement to exchange mutual performances.

Exclusive Dealing Contract

An agreement where one party agrees to buy goods exclusively from another party, thereby preventing the seller from selling to others.

UCC

Uniform Commercial Code, a comprehensive set of laws governing commercial transactions in the United States, making business operations more uniform across states.