An increase in the domestic interest rate relative to other interest rates should
A)increase investment spending.
B)decrease consumption spending.
C)increase government spending.
D)increase net exports.

Question

Quizplus · Accepted Answer

An increase in domestic interest rates makes borrowing more expensive, which can lead to a decrease in consumption spending as consumers may cut back on borrowing for big-ticket items.

An Increase in the Domestic Interest Rate Relative to Other