A lower real interest rate typically induces consumers to:
A) Save more
B) Buy fewer imported goods
C) Purchase more goods that are bought using credit
D) Purchase fewer goods that are bought without using credit

Question

Quizplus · Accepted Answer

A lower real interest rate decreases the cost of borrowing money, making it more affordable to purchase goods using credit. This increase in affordability can lead to an increase in consumer purchases of goods bought with credit. On the other hand, lower real interest rates do not necessarily lead to an increase in savings or a decrease in purchasing goods without using credit or buying imported goods.

A Lower Real Interest Rate Typically Induces Consumers To