For a borrower, an increase in the real interest rate
A) definitely reduces current consumption and increases future consumption.
B) reduces current consumption and has an uncertain effect on future consumption.
C) has an uncertain effect on current consumption and increases future consumption.
D) has an uncertain effect on both current and future consumption.
B
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If the demand for the Ford Mustang increases, we would expect Ford to
A) keep the price of Mustangs constant, regardless of the cost or benefit of a price change. B) increase the price of Mustangs to keep pace with the increase in demand. C) increase the price of Mustangs only if the benefit of a price increase outweighs the cost. D) decrease the price of Mustangs to maintain the increase in demand.
Which of the following factors can influence the production possibilities frontier in the future?
a. The amount of capital produced b. A fall in the rate of inflation c. A decrease in consumption in an economy d. An increase in the tax rate e. A legal reform that increases transaction costs