Other things equal,an increase in the interest rate will

Question

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An increase in interest rates will raise the cost of borrowing and make it more expensive for firms to finance their investment projects. As a result, firms are likely to reduce their investment expenditures, leading to a decrease in economic growth and employment in the short run. In the long run, however, higher interest rates may help to control inflation by reducing overall spending in the economy.

Other Things Equal,an Increase in the Interest Rate Will