A lower interest rate

Name: A lower interest rate
Brand: Quizplus
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Question

Quizplus · Accepted Answer

A lower interest rate will typically lead to an increase in disposable income, which would lead to an increase in consumption. This increase in consumption would likely consist of a higher portion of permanent income since people are more likely to increase their consumption for long-term goods and investments when they have more disposable income. Therefore, a lower interest rate would raise the marginal propensity to consume out of permanent income.

A Lower Interest Rate