\If the interest rate increases, then the:
A)economy will move to a new point along the existing consumption function.
B)consumption function will shift up.
C)consumption function will shift down.
D)investment demand curve will shift up.
E)economy will move to a new point along the existing investment demand curve.

Question

Quizplus · Accepted Answer

An increase in interest rates typically leads to a decrease in consumption, as borrowing becomes more expensive, causing the consumption function to shift down.

\If the Interest Rate Increases, Then The