A rise in the real interest rate ________ consumption expenditure and ________
A) decreases; shifts the consumption function downward
B) decreases; results in a movement downward along the consumption function
C) decreases; shifts the consumption function upward
D) increases; shifts the consumption function upward
E) increases; shifts the consumption function downward
A
You might also like to view...
In 2007 the real interest rate in the United States was 2 percent. By 2013, the equilibrium real interest in the United States was ________ because the ________
A) 0.5 percent; United States experienced a deep recession as a result of a financial crisis in 2008-2009 B) 0.5 percent; United States began to recover from the deep recession and financial crisis of 2008-2009 C) 3.5 percent; United States began to recover from the deep recession and financial crisis of 2008-2009 D) 3.5 percent; United States experienced a deep recession as a result of a financial crisis in 2008-2009 E) not yet calculated; effects of the financial crisis of 2008-2009 have not yet been tallied The figure above shows the demand for loanable funds curve.
If there is a shortage of loanable funds, then
a. the quantity demanded is greater than the quantity supplied and the interest rate will rise. b. the quantity demanded is greater than the quantity supplied and the interest rate will fall. c. the quantity supplied is greater than the quantity demanded and the interest rate will rise. d. the quantity supplied is greater than the quantity demanded and the interest rate will fall.