Generally speaking, the higher the interest rate at which a firm has to borrow,

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Higher interest rates increase the cost of borrowing, which makes it more expensive for firms to hold excess inventory. Consequently, firms will be more likely to adjust their inventories upward in response to a surge in sales if interest rates are low rather than high. Therefore, the higher the interest rate, the smaller the upward adjustment of inventories in response to a surge in sales.

Generally Speaking, the Higher the Interest Rate at Which a Firm