Higher interest rates tend to
A) reduce the total planned spending on goods and services.
B) lower the costs of building new plants and equipment.
C) increase the quantity demanded of goods and services.
D) make it less costly for people to buy houses and cars.

Question

Quizplus · Accepted Answer

Higher interest rates increase the cost of borrowing money, making it more expensive for businesses and households to finance new investments and purchases. This tends to reduce their overall planned spending on goods and services.

Higher Interest Rates Tend to