A lowering of interest rates will cause:
A)domestic consumers to be happier.
B)national capital account creation.
C)an outflow of money from the country.
D)domestic consumers to be happier and an outflow of money from the country.

Question

Quizplus · Accepted Answer

A lowering of interest rates will make borrowing easier and cheaper for domestic consumers, which will make them happier. However, this will also cause lower returns on investments for foreign investors, which will lead to an outflow of money from the country. Therefore, both options A and C are correct and the best choice is D.

A Lowering of Interest Rates Will Cause