If the interest rate increases from 3 percent to 4 percent, other things constant, individuals will want to

Question

Quizplus · Accepted Answer

When the interest rate increases, it becomes more expensive to borrow money. This encourages individuals to save more and borrow less, as the return on saving increases and the cost of borrowing increases. Therefore, Choice C, which states that individuals will save more and borrow less, is the best choice.

If the Interest Rate Increases from 3 Percent to 4