Which of the following is an implication of low interest rates?
A) Cost of capital for firms will be high.
B) Firms will invest less in future growth.
C) Economic growth rate will fall.
D) Consumer demand will increase.

Question

Quizplus · Accepted Answer

Low interest rates have a direct bearing on consumer demand. When credit is cheap (because interest rates are low), consumers buy homes, automobiles, computers, and even vacations on credit; in turn, all of this demand fuels economic growth. During periods of low interest rates, firms can easily borrow money to finance future growth. Borrowing at lower rates lowers the cost of capital and enhances a firm's competitiveness.

Which of the Following Is an Implication of Low Interest