An increase in the interest rate leads to:
A)an increase in planned inventories.
B)an increase in GDP.
C)an increase in unplanned inventories.
D)an increase in consumption.
E)none of the above.

Question

Quizplus · Accepted Answer

An increase in the interest rate typically leads to a decrease in investment and consumption as borrowing costs become higher. This can lead to an increase in unplanned inventories as sales slow down, reflecting decreased spending by businesses and consumers.

An Increase in the Interest Rate Leads To