If interest rates decrease, business investment expenditures are likely to ______, and consumer durable expenditures are likely to _________.

Question

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When interest rates decrease, it becomes cheaper for businesses to borrow money to finance investment projects. This increase in borrowing power can lead to an increase in business investment expenditures. Lower interest rates also make it cheaper for consumers to borrow money to finance big-ticket purchases, such as homes or cars, leading to an increase in consumer durable expenditures.

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