Higher interest rates
A)reduce the quantity of goods and services demanded because they increase the cost of borrowing money.
B)reduce the quantity of goods and services demanded because they reduce the income of bankers and other creditors.
C)increase the quantity of goods and services demanded because they increase the incomes of all people in the economy.
D)increase the quantity of goods and services demanded because they lower the costs of building new plants and equipment.

Question

Quizplus · Accepted Answer

Higher interest rates increase the cost of borrowing money, which tends to reduce the quantity of goods and services demanded because consumers, businesses, and the government will all hesitate to take on additional debt at higher rates.

Higher Interest Rates