Multiple Choice
Interest sensitive consumption is negatively impacted by interest rates because when you
A) pay cash for something, the price you really pay depends on the interest rate.
B) buy something on installments (like a car) your payments are positively related to the interest rate so a higher interest rate would mean a higher payment, and therefore, less interest sensitive consumption.
C) buy something on installments (like a car) your payments are negatively related to the interest rate so a higher interest rate would mean a higher payment, and therefore, less interest sensitive consumption.
D) buy something you really need, the price you really pay depends on the interest rate.
Correct Answer:
Verified
Correct Answer:
Verified
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