Answer 2. An increase in the real interest rate will cause an increase in ______
ID: 1178569 • Letter: A
Question
2. An increase in the real interest rate will cause an increase in ________.
3. IS Curve Exogenous Variables and Parameters
4. Investment spending ________.
5. If disposable income falls, consumption expenditure falls ________.
Explanation / Answer
1.When the U.S. real interest rate rises ________.
Answer
U.S. dollar assets earn a higher return relative to foreign assets
2. An increase in the real interest rate will cause an increase in ________.
Answer
saving
3. IS Curve Exogenous Variables and Parameters
Table 1
Given the values in the table above, the real interest rate r = ________ when equilibrium output Y = 15.
Answer
10
4. Investment spending ________.
Answer
is negatively related to the real interest rate
5. If disposable income falls, consumption expenditure falls ________.
Answer
by an amount smaller than the decrease in disposable income
U.S. dollar assets earn a higher return relative to foreign assets