Which of the following would be most likely to lead to higher interest rates on all debt securities in the economy?
A) Households start saving a larger percentage of their income.
B) The economy moves from a boom to a recession.
C) The level of inflation begins to decline.
D) Corporations step up their expansion plans and thus increase their demand for capital.
E) The Central Bank uses monetary policy in an attempt to stimulate the economy.

Question

Quizplus · Accepted Answer

When corporations increase their demand for capital to fund expansion plans, the demand for funds in the economy rises, which can lead to higher interest rates as lenders can charge more due to increased competition for available funds.

Which of the Following Would Be Most Likely to Lead