In recent years in Europe,Japan,and the United States,interest rates have remained low because of a combination of

Question

Quizplus · Accepted Answer

Low interest rates are usually the result of low inflation and a lack of profitable investment opportunities. Inflation erodes the value of money over time and increases the cost of borrowing, so when inflation is low, businesses and individuals are less likely to demand loans, leading to lower interest rates. When there are few profitable investment opportunities, banks and other lenders have to lower their interest rates to attract borrowers. High government deficits and high inflation are usually associated with higher interest rates, so choices A and B can be eliminated. Choice C is incorrect because high inflation usually leads to higher interest rates as lenders demand compensation for the loss of purchasing power over time.

In Recent Years in Europe,Japan,and the United States,interest Rates Have