When interest rate rise consumers will
A)compare loan payments with the desirability of goods in the future and increase consumption.
B)compare loan payments with the desirability of goods today and increase consumption.
C)wait to borrow funds when interest rates fall.
D)none of above.

Question

Quizplus · Accepted Answer

When interest rates rise, consumers are likely to wait to borrow funds until interest rates fall. This is because borrowing becomes more expensive, and consumers may look for cheaper alternatives or delay their borrowing altogether. Option A and B suggest that consumers will increase consumption when interest rates rise, which is not typically the case. Option D is incorrect because there is a clear response from consumers to changes in interest rates, even if that response is to delay borrowing.

When Interest Rate Rise Consumers Will