Lower interest rates are likely to
A) have no effect on consumer spending or saving.
B) decrease consumer spending and increase consumer saving.
C) decrease both consumer spending and consumer saving.
D) increase consumer spending and decrease consumer saving.

Question

Quizplus · Accepted Answer

Lower interest rates make it cheaper to borrow money, which encourages consumers to spend more and save less. Therefore, the best choice is D, which suggests that lower interest rates will increase consumer spending and decrease consumer saving.

Lower Interest Rates Are Likely to