An increase in the interest rate leads to an increase in the quantity demanded to borrow.

Question

Quizplus · Accepted Answer

An increase in interest rates leads to a decrease in the quantity demanded to borrow. This is because higher interest rates make borrowing more expensive, reducing the incentive for individuals and businesses to take out loans or obtain credit. As a result, they may instead choose to save more money or postpone their borrowing decisions until interest rates decline again.

An Increase in the Interest Rate Leads to an Increase