If real interest rates decrease, we generally expect
A)saving to increase.
B)saving to decrease.
C)consumption spending to decrease.
D)no significant change in saving.

Question

Quizplus · Accepted Answer

When real interest rates decrease, it becomes less expensive to borrow money. As a result, individuals and businesses are more likely to borrow and spend rather than save, leading to a decrease in saving.

If Real Interest Rates Decrease, We Generally Expect