Holding all else constant,higher real interest rates promote ________ spending in the economy and result in ________ inflation.
A) less;lower
B) less;higher
C) more;higher
D) more;lower
E) no change in;lower

Question

Quizplus · Accepted Answer

When real interest rates are higher, it becomes more expensive for businesses and consumers to borrow money, leading to a decrease in spending in the economy. This decrease in spending can lead to lower inflation as there is less demand for goods and services.

Holding All Else Constant,higher Real Interest Rates Promote ________ Spending