Which of the following situations would best explain why the real long-term interest rate would increase?
A)An increase in the consumption share of GDP
B)A decrease in the investment share of GDP
C)A decrease in the government share of GDP
D)A decrease in exports
E)An increase in imports

Question

Quizplus · Accepted Answer

An increase in the consumption share of GDP would likely lead to an increase in the real long-term interest rate because it could signal higher demand for funds, reducing savings relative to investment demand, thus pushing interest rates up.

Which of the Following Situations Would Best Explain Why the Real