When interest rates rise
A) borrowing costs increase, and total planned real expenditures decline.
B) borrowing costs increase and total planned real expenditures increase.
C) borrowing costs decline, and total planned real expenditures increase.
D) borrowing costs decline, and total planned real expenditures decline.

Question

Quizplus · Accepted Answer

When interest rates rise, borrowing costs increase. This makes it more expensive for individuals and businesses to borrow money for investments or purchases. As a result, they may reduce their spending or delay making major purchases, causing total planned real expenditures to decline.

When Interest Rates Rise