An increase in interest rates is directly related to an increase in discretionary income and an increase in the demand for discretionary goods.

Question

Quizplus · Accepted Answer

An increase in interest rates actually results in a decrease in discretionary income as loan payments and interest costs increase. This, in turn, leads to a decrease in the demand for discretionary goods as consumers have less money to spend.

An Increase in Interest Rates Is Directly Related to an Increase