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

Question

Quizplus · Accepted Answer

A decrease in the real interest rate reduces the cost of borrowing, which typically encourages consumers to spend more, especially on durable goods like cars and appliances, because the financing costs are lower.

A Decrease in the Real Interest Rate Will