If the interest rate increases,_____

Question

Quizplus · Accepted Answer

An increase in the interest rate will lead to an increase in the cost of borrowing, as lenders will demand a higher rate of return on their loans. This is because as interest rates increase, the risk of default by borrowers also increases, making borrowing more expensive. Therefore, option B is the correct answer. Options A, C, D, and E are incorrect, as an increase in interest rates does not necessarily result in any of these outcomes.

If the Interest Rate Increases,_____