An increase in interest rates will cause
A)AD to increase (move to the right).
B)AD to decrease (move to the left).
C)AS to increase (move to down and to the right).
D)AS to decrease (move to up and to the left).

Question

Quizplus · Accepted Answer

An increase in interest rates typically will cause a decrease in consumption and investment spending, which will lead to a decrease in aggregate demand (AD) as people and firms will be less likely to borrow money for purchases.

An Increase in Interest Rates Will Cause