If interest rates decrease, business investment expenditures are likely to ______, and consumer durable expenditures are likely to _________.
A) increase; increase
B) increase; decrease
C) decrease; increase
D) decrease; decrease
E) be unaffected; be unaffected

Question

Quizplus · Accepted Answer

When interest rates decrease, it becomes cheaper for businesses to borrow money for investment, leading to an increase in business investment expenditures. Similarly, lower interest rates make financing more affordable for consumers, boosting their spending on durable goods.

If Interest Rates Decrease, Business Investment Expenditures Are Likely to ______