When interest rates fall
A)firms want to borrow more for new plants and equipment and households want to borrow more for homebuilding.
B)firms want to borrow more for new plants and equipment and households want to borrow less for homebuilding.
C)firms want to borrow less for new plants and equipment and households want to borrow more for homebuilding.
D)firms want to borrow less for new plants and equipment and households want to borrow less for homebuilding.

Question

Quizplus · Accepted Answer

When interest rates fall, borrowing becomes cheaper and firms are more likely to invest in new plants and equipment. Similarly, households find it more affordable to finance homebuilding projects and may take out loans to do so. Therefore, both firms and households want to borrow more.

When Interest Rates Fall