What is a decrease in interest rates likely to result in?
A)no change in either consumption or investment spending
B)a decrease in investment spending
C)an increase in consumption spending
D)a decrease in consumption spending

Question

Quizplus · Accepted Answer

A decrease in interest rates makes it cheaper to borrow money, which incentivizes people to spend more on big-ticket items like homes or cars. Thus, an increase in consumption spending is likely to result from a decrease in interest rates.

What Is a Decrease in Interest Rates Likely to Result