An increase in interest rates can be caused by a _____ money policy or _____ in expected inflation.
A) tight; a decrease
B) tight; an increase
C) loose; an increase
D) loose; a decrease

Question

Quizplus · Accepted Answer

An increase in interest rates can be caused by a tight money policy, as central banks may raise rates to control inflation or cool down an overheating economy. Additionally, an increase in expected inflation can also lead to higher interest rates as lenders demand higher returns to compensate for the decreased purchasing power of future interest payments.

An Increase in Interest Rates Can Be Caused by a _____