Higher short term interest rates can be used to prevent inflation because they
A) discourage saving
B) increase the debt-service expense for the government
C) cause the country's currency to depreciate on the world market
D) enhance consumer confidence
E) discourage investment

Question

Quizplus · Accepted Answer

Higher short-term interest rates make borrowing more expensive, which can reduce spending and investment by businesses and consumers, helping to cool down an overheating economy and prevent inflation.

Higher Short Term Interest Rates Can Be Used to Prevent