Which of the following would be most likely to result in low real interest rates over a lengthy period of time?
A) Expansionary monetary policy.
B) Large budget deficits.
C) A savings glut as the result of higher sustained oil prices and the expansion in the revenues of oil producers.
D) An increase in the share of the population under age 50, a phase of life during which people borrow heavily to purchase "big ticket" items like houses and cars.

Question

Which of the following would be most likely to result in low real interest rates over a lengthy period of time?
A) Expansionary monetary policy.
B) Large budget deficits.
C) A savings glut as the result of higher sustained  oil prices and the expansion in the revenues of oil producers.
D) An increase in the share of the population under age 50, a phase of life during which people borrow heavily to purchase "big ticket" items like houses and cars.

Quizplus · Accepted Answer

A savings glut as a result of higher sustained oil prices and the expansion in the revenues of oil producers can lead to low real interest rates over a lengthy period of time. This is because oil-producing countries have a tendency to save a large portion of their newfound wealth, leading to excess savings and a decrease in demand for loans. As a result, lenders may lower interest rates to entice borrowers and stimulate economic activity.

Which of the Following Would Be Most Likely to Result