When expansionary monetary policy pushes interest rates to artificially low levels,
A) the demand for and prices of interest-sensitive goods, like housing, will increase.
B) people will delay their purchases of interest-sensitive goods, like housing, into the future.
C) the demand for interest-sensitive goods, like housing, will increase, but their prices will decline.
D) the demand for and prices of interest-sensitive goods, like housing, will decline.

Question

Quizplus · Accepted Answer

Lower interest rates make borrowing cheaper, increasing demand for interest-sensitive goods like housing, which in turn raises their prices.

When Expansionary Monetary Policy Pushes Interest Rates to Artificially Low