If interest rates rise, there will be a(n):
A) decrease in aggregate demand.
B) increase in aggregate demand.
C) increase in aggregate supply.
D) increase in the money supply.

Question

Quizplus · Accepted Answer

When interest rates rise, borrowing becomes more expensive, which reduces consumer spending and investment. This leads to a decrease in aggregate demand as people will be less likely to take out loans to fund purchases or investments.

If Interest Rates Rise, There Will Be A(n)