A Higher Interest Rate ________ and ________

question 57

Multiple Choice

A higher interest rate ________ and ________.

• A) reduces the present value of future income; reduces today's consumption
• B) increases the present value of future income; increases today's consumption
• C) increases the discount rate; increases today's consumption
• D) is an incentive to borrow more today; reduces future consumption
• E) reduces inflation; consumers spend more today

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Definitions:

Technological Innovations

The implementation of new technologies or the novel application of existing technologies to create new products, processes, or services.

Smoot-Hawley

Refers to the Smoot-Hawley Tariff Act of 1930, a legislation passed in the United States that imposed high tariffs on imported goods to protect American businesses and farmers, which is widely considered to have exacerbated the Great Depression.

Federal Tax Revenue

The income collected by the federal government through various types of taxes to fund national programs and services.