If the real interest rate decreases,
A) the marginal propensity to expend will increase.
B) autonomous spending will increase.
C) the marginal propensity to expend will decrease.
D) autonomous spending will decrease.

Question

Quizplus · Accepted Answer

A decrease in the real interest rate typically lowers the cost of borrowing, which can lead to an increase in autonomous spending as consumers and businesses are more likely to take loans for consumption and investment.

If the Real Interest Rate Decreases