What is often the result of raising interest rates to control inflation?
A) Economic expansion
B) Economic contraction
C) Policy failure
D) An increase in firm investment

Question

Quizplus · Accepted Answer

Raising interest rates increases the cost of borrowing, making it more expensive for businesses and individuals to access credit. This slows down spending, borrowing and investment within the economy, and reduces the demand for goods and services. As a result, output and employment levels decrease, leading to economic contraction.

What Is Often the Result of Raising Interest Rates to Control