Which of the following would cause the interest rates to increase in the near future The...
Which of the following would cause the interest rates to increase in the near future
The government doubles the amount of money added to the economy.
The economy starts to slide into a recession.
Concern increases regarding the national security of the US (i.e. the risk associated with investing in the US economy).
A large demographic shift occurs in which people retire and live off their savings (this will increase the time preference for consumption).
Choice 1, 3, and 4 are correct.
All of the above are correct.
Homework Answers
Statement 3 and 4
Statement 1 is incorrect since higher supply of money will decrease interest rates.
2: Interest rates drop in a recession
3: HIgher risk invites higher rates of interest to compensate investors for higher risk.
4: Higher interest rates are offered to invite people to invest.
5 and 6 are incorrect
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