A Consumption-Based Theory of the Determination of the Real Interest

Multiple Choice

A consumption-based theory of the determination of the real interest rate is based on the assumption that:​

A) ​a rise in the real interest rate will increase current consumption.
B) ​the real interest rate must adjust to make people willing to experience changing consumption levels over time.
C) ​the real interest rate is determined by the supply and demand for investment and is therefore unaffected by consumption decisions.
D) the real interest rate must be positive.