Which of the following describes the relationship between interest rates and interest-sensitive goods, such as housing?
A) As interest rates decline, the demand for interest-sensitive goods increases.
B) As interest rates decline, the demand for interest-sensitive goods decreases.
C) As interest rates increase, the demand for interest-sensitive goods increases, driving prices upward.
D) As interest rates increase, the demand for interest-sensitive goods decreases, driving prices upward.

Question

Quizplus · Accepted Answer

When interest rates decline, borrowing costs decrease, making it cheaper for consumers to finance purchases of interest-sensitive goods like housing, thus increasing demand.

Which of the Following Describes the Relationship Between Interest Rates