Which of the following is likely to happen to short-term and long-term interest rates during recessions?
A)The short-term interest rates rise during recessions but the long-term interest rates fall during recessions.
B)The short-term interest rates fall during recessions but the long-term interest rates rise during recessions.
C)Both the short-term and the long-term interest rates fall during recessions.
D)Both the short-term and the long-term interest rates rise during recessions.

Question

Quizplus · Accepted Answer

During recessions, central banks often lower interest rates to stimulate economic activity. This typically results in both short-term and long-term interest rates falling as the demand for loans decreases and the supply of money increases.

Which of the Following Is Likely to Happen to Short-Term