An increase in the domestic interest rate relative to other interest rates should
A)increase investment spending.
B)decrease consumption spending.
C)decrease government spending.
D)increase net exports.
E)decrease the exchange rate.

Question

Quizplus · Accepted Answer

An increase in domestic interest rates typically leads to higher borrowing costs, which can reduce consumption spending as consumers may cut back on borrowing and spending.

An Increase in the Domestic Interest Rate Relative to Other