Give an example of how money is often handled when interest rates are high.
What will be an ideal response?
Examples will vary but should show a thorough understanding of how high interest rates affect the way people handle money. For example, when interest rates are high, the opportunity costs for holding money are also high. Because various investments have high interest, if a person holds onto his or her money and doesn’t invest, he or she has a good chance of losing an opportunity to make a lot more money. As a result, when interest rate are high, many people invest their money in various options, such as CDs, U.S. Treasury bills, and high interest savings accounts.
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At an interest rate of 6 percent, what would be the present value of receiving $22,000 twelve years from now?
A) $10,934 B) $18,645 C) $19,643 D) $20,755
The unemployment rate does not reflect the true extent of the unemployment problem. Which of the following groups is not counted as unemployed in the official unemployment statistics?
a. The underemployed and the cyclically unemployed b. The underemployed and discouraged workers c. Discouraged workers and the frictionally unemployed d. The frictionally unemployed and the structurally unemployed e. The cyclically unemployed and the frictionally unemployed
Which of the following has a direct relationship rather than an inverse relationship with the supply curve?
a. The number of sellers. b. Resource prices. c. Consumer income. d. Prices of other goods that firms could produce.
C. stayed relatively low, due to the lack of lending by banks, reducing the effectiveness of the money multiplier.
A. import, because they are assembled in China. B. import, because they are assembled in Mexico. C. export, because they are assembled in China. D. export, because they are produced in the U.S.