An economy's ________ will fall if its real interest rate rises.
A) labor supply
B) real output
C) real wage rate
D) supply of credit

Question

Quizplus · Accepted Answer

An increase in real interest rates would lead to decreased investment by firms and decreased consumption by households, both of which would lead to a decrease in real output, or the economy's overall production of goods and services. The other options are not directly affected by changes in the real interest rate.

An Economy's ________ Will Fall If Its Real Interest Rate