Which of the following factors would be most likely to lead to an increase in interest rates in the economy?
A) Households reduce their consumption and increase their savings.
B) The federal government decides to try to stimulate the economy.
C) There is an increase in expected inflation.
D) The economy falls into a recession.

Question

Quizplus · Accepted Answer

An increase in expected inflation would lead to an increase in interest rates, as lenders would demand higher interest rates to compensate for the anticipated loss of purchasing power due to inflation.

Which of the Following Factors Would Be Most Likely to Lead