The consumption share will increase if there is a decrease in the real interest rate.

Name: The consumption share will increase if there is a decrease in the real interest rate.
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Question

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When the real interest rate decreases, it becomes less attractive to save money and the cost of borrowing decreases, which leads to an increase in consumption expenditure. This is why an decrease in the real interest rate is expected to increase consumption share.

The Consumption Share Will Increase If There Is a Decrease