In the short run,if the Bank of Canada increases interest rates,then consumption and investment ______,planned aggregate expenditure ______,and short-run equilibrium output _______.
A) increase;increases;increases
B) increase;increases;decreases
C) increase;decreases;decreases
D) decrease;decreases;increases
E) decrease;decreases;decreases

Question

Quizplus · Accepted Answer

Higher interest rates typically lead to decreased consumption and investment because borrowing costs are higher. This results in lower planned aggregate expenditure and a decrease in short-run equilibrium output.

In the Short Run,if the Bank of Canada Increases Interest