When Real Rates of Interest Are Positive, It Is Better

question 159

Multiple Choice

When real rates of interest are positive, it is better to be a:

• A) saver than a borrower, because the value of savings and debts are increasing.
• B) borrower than a saver, because the value of savings and debts are increasing.
• C) saver than a borrower, because the value of savings and debts are decreasing.
• D) borrower than a saver, because the value of savings and debts are decreasing.

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Definitions:

Binding Quota

A limit on the quantity of goods that can be imported or exported over a period, which cannot be exceeded.

Japanese-Made Cars

Vehicles manufactured by automotive companies based in Japan, known for their reliability and technology.

Substitutes

Goods or services that can replace each other in use, where an increase in the price of one leads to an increase in demand for the other.

Quota Rent

The earnings that accrue to the holder of the right to import or export a product due to trade quotas.