A decrease in the real interest rate will
A)cause consumers to spend less and save more.
B)most likely increase consumer purchases of durable goods.
C)most likely increase the reward to savings.
D)most likely increase the cost of borrowing.
E)most likely transfer wealth from borrowers to lenders.

Question

Quizplus · Accepted Answer

A decrease in the real interest rate reduces the cost of borrowing, which typically encourages consumers to buy more durable goods like cars and appliances, as these often require financing.

A Decrease in the Real Interest Rate Will