If interest rates fall and the return on real assets goes up, then households will hold which of the following?

Question

Quizplus · Accepted Answer

When interest rates fall, the return on financial assets, such as bonds, decreases. Conversely, the return on real assets, such as real estate or commodities, tends to increase because borrowing costs are lower. As a result, households will likely shift their portfolio towards holding more real assets and fewer financial assets. Therefore, choice B is the best answer as it reflects this shift in portfolio allocation.

If Interest Rates Fall and the Return on Real Assets