When the interest rate in the United States decreases as a result of expansionary monetary policy, investment spending _____ and consumption _____ .

Question

Quizplus · Accepted Answer

When interest rates decrease, it becomes cheaper for businesses to borrow money to invest in new projects or expand their operations, thus increasing investment spending. It also becomes cheaper for individuals to borrow money, which can increase their ability to consume goods and services, leading to an increase in consumption.

When the Interest Rate in the United States Decreases as a Result