Suppose there is a decrease in the confidence that workers have in their future employment and income. This will cause
A)a decrease in borrowing which will decrease interest rates.
B)a decrease in saving which will decrease interest rates.
C)a decrease in borrowing which will increase interest rates.
D)a decrease in saving which will increase interest rates.

Question

Quizplus · Accepted Answer

When workers have less confidence in their future employment and income, they are likely to borrow less, anticipating the need to save more or spend less. This decrease in demand for loans can lead to lower interest rates as banks and other financial institutions try to encourage borrowing.

Suppose There Is a Decrease in the Confidence That Workers