Suppose Households Feel More Optimistic About the Future and Decide

Multiple Choice

Suppose households feel more optimistic about the future and decide to increase consumption. This rise in consumer confidence will cause:

A) the natural real interest rate to rise.
B) the natural real interest rate to fall.
C) ambiguous effects on the natural real interest rate.
D) no effect on the natural real interest rate.
E) the natural real interest rate falls when the nominal rate falls.