Answered

Welcome to Westonci.ca, where you can find answers to all your questions from a community of experienced professionals. Connect with a community of professionals ready to help you find accurate solutions to your questions quickly and efficiently. Get detailed and accurate answers to your questions from a dedicated community of experts on our Q&A platform.

What happens to consumer and business spending when interest rates go up?

A. Business spending increases and consumer spending decreases.
B. Both types of spending increase.
C. Both types of spending decrease.
D. Consumer spending increases and business spending decreases.

Sagot :

GinnyAnswer

Final answer:

When interest rates increase, both business and consumer spending decrease due to reduced borrowing for investments and purchases, leading to crowding out effects.


Explanation:

When interest rates go up, business spending decreases because firms are less willing to borrow for investment, while consumer spending also decreases as households are less likely to borrow for purchases like homes and cars. This reduction in spending is referred to as crowding out and can have substantial effects on the economy.


Learn more about Impact of interest rates on business and consumer spending here:

https://brainly.com/question/40262778


Thank you for visiting. Our goal is to provide the most accurate answers for all your informational needs. Come back soon. Thanks for using our platform. We aim to provide accurate and up-to-date answers to all your queries. Come back soon. Thank you for visiting Westonci.ca. Stay informed by coming back for more detailed answers.