Lowering the interest rate will normally
A) decrease spending on consumer durables.
B) increase investment projects by firms.
C) decrease spending on new homes.
D) decrease the value of the dollar and lower net exports.
Falling interest rates can
A) increase a firm's share price, which causes firms to issue more shares and thus increases funds for investment.
B) raise the cost of borrowing for firms and decrease investment.
C) raise the cost of buying new homes and fewer new homes will be purchased.
D) lower the cost of buying new homes and fewer new homes will be purchased.
If interest rates rise,this will _________ the cost of buying new homes,so ________ new homes will be purchased thereby reducing ___________ expenditures.
A) lower; more; consumption
B) raise; fewer; consumption
C) raise; fewer; investment
D) lower; more; investment
When the Reserve Bank of Australia raises the cash rate,this normally leads to
A) other interest rates rising, which stimulates consumption spending.
B) people spending less because they have less money.
C) other interest rates falling, which stimulates investment spending.
D) other interest rates rising, which reduces investment spending.