An increase in the real interest rate will:
A)cause consumers to spend more and save less.
B)most likely lower consumer purchases of durable goods.
C)most likely lower the reward to savings.
D)most likely lower the cost of borrowing.

Question

Quizplus · Accepted Answer

An increase in the real interest rate makes borrowing more expensive and saving more attractive, leading to a decrease in consumer spending, especially on high-cost items like durable goods.

An Increase in the Real Interest Rate Will