Practice Questions
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What is the primary role of central banks in relation to interest rates?
Central banks change interest rates to help control inflation. Other options are incorrect because Some might think central banks give loans directly ...
How do interest rate hikes typically affect economic growth in the short term?
When interest rates go up, borrowing money becomes more expensive. Other options are incorrect because Some might think higher rates encourage spendin...
How do changes in savings rates typically affect key economic indicators such as inflation and unemployment in an economy?
When people save more money, they spend less. Other options are incorrect because Some might think that spending less means prices go up; This option ...
How do nominal interest rate hikes typically affect inflation and real interest rates in an economy?
When nominal interest rates go up, it usually helps to lower inflation. Other options are incorrect because Some might think that higher rates do not ...
How do rising interest rates typically affect consumer spending, business investment, and the unemployment rate in an economy?
When interest rates go up, borrowing money becomes more expensive. Other options are incorrect because This answer suggests that more spending leads t...
What is the primary effect of increasing interest rates on consumer spending?
When interest rates go up, borrowing money becomes more expensive. Other options are incorrect because Some might think higher rates mean more savings...
How do changes in interest rates typically affect consumer spending in an economy?
When interest rates go up, borrowing money becomes more expensive. Other options are incorrect because Some might think that higher rates mean more sp...
How do rising interest rates typically affect inflation in an economy?
When interest rates go up, borrowing money becomes more expensive. Other options are incorrect because Some might think higher interest rates mean mor...
A country experiences a significant decrease in interest rates due to a shift in monetary policy aimed at stimulating the economy. As a result, what is the most likely immediate effect on the economy, considering the relationships between interest rates, consumption, and investment?
When interest rates go down, borrowing money becomes cheaper. Other options are incorrect because This answer suggests that lower interest rates make ...
If the central bank lowers interest rates, which of the following outcomes can we most likely expect in the economy?
When interest rates go down, borrowing money becomes cheaper. Other options are incorrect because Some might think lower interest rates mean bond pric...
Which of the following outcomes occur when interest rates decrease? Select all that apply.
When interest rates go down, it usually helps the economy. Other options are incorrect because Some might think lower interest means bond prices go up...
How would a decrease in interest rates likely impact aggregate demand and the economy overall?
When interest rates go down, borrowing money becomes cheaper. Other options are incorrect because Some might think lower interest rates mean less spen...
If the central bank lowers interest rates, what is the most direct impact on the economy?
When interest rates go down, borrowing money becomes cheaper. Other options are incorrect because Some might think lower interest rates mean bonds los...
Interest Rates : Bond Prices :: Economic Activity : ?
When economic activity is strong, businesses want to invest more. Other options are incorrect because Some might think that a strong economy means peo...
When interest rates decrease, the price of _____ tends to increase due to their inverse relationship.
When interest rates go down, existing bonds become more valuable. Other options are incorrect because Some people think stocks will rise when interest...
If interest rates decrease, which of the following is the most likely effect on the economy?
When interest rates go down, borrowing money becomes cheaper. Other options are incorrect because Some might think that lower interest rates scare off...
Arrange the following steps in the correct order to illustrate how a decrease in interest rates affects the economy according to the AD-AS model: A) Increased consumption and investment lead to higher demand; B) Decrease in interest rates; C) Higher price levels and real income; D) Bond prices increase due to the inverse relationship with interest rates.
When interest rates go down, borrowing money becomes cheaper. Other options are incorrect because This option suggests that bond prices change before ...
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